Lithia Motors off to quick start with 2022 dealership acquisitions

lithia motors off to quick start with 2022 dealership acquisitions

Lithia Motors Inc., which has outsized acquisition ambitions, acknowledged its 2022 pace of buying dealerships is quicker than expected.

The company, which bought six dealerships in two first-quarter acquisitions, has additional deals under contract worth $1.9 billion in annual revenue.

“We now have either closed, or have under contract, $3 billion [of annualized revenue] so far year to date,” he said during the company’s first- quarter earnings call last week. “That’s a big number. It’s a little higher than what we expected. Most importantly, we do not adjust our disciplines. We’re finding partners that are excited about joining us at multiples that we look at on a normalized basis to be able to do that.”

Lithia’s completed first-quarter acquisitions in Northern California and Las Vegas are expected to generate annual revenue of $1.1 billion, meaning the Medford, Ore., retailer has deals expected to generate annual revenue of almost $2 billion under contract, Tom Dobry, Lithia’s vice president of marketing, confirmed.

While Dobry declined to disclose the markets where Lithia has transactions underway, the closings are likely to occur this quarter and in the third quarter.

“I think the things that are under contract, we would estimate to close within 90 days,” Dobry told Automotive News. “And that we would anticipate additional opportunities in the rest of the year.”

Lithia, the nation’s second-largest new-vehicle retailer, saw its net income more than double in the first quarter. And while it is one of the most active players in buying dealerships, it recently has sold some as well.

In March, it sold a Stellantis dealership in California, while it divested of a Texas Honda dealership this month. Lithia also closed its BMW of Utica dealership in New York in January.

“We always optimize our network to make sure that it’s clean,” DeBoer said. “We bought stores over the years that were in groups, typically, that weren’t right for Lithia. And it’s a matter of divesting those.”

DeBoer described today’s buy-sell environment as one in which “everything is kind of salable” and said Lithia took advantage of it with the stores it sold.

“You’ll probably see more of that in the next few quarters,” DeBoer said of divestitures. “You probably have a half a dozen stores that are typically smaller stores. Maybe located in an area where it’s not helping our network at all, meaning it’s a duplicate store or a secondary store, or it’s in too small a market, where you’re utilizing a general manager talent and you can reposition them in a better and bigger store.”


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