Is World Series Really Worldwide?
Returning to the baseball metaphor, is the World Series really worldwide? If so, some large dealer groups outside the U.S. could shake up the top 100. On the other hand, the WardsAuto Megadealer 100 entry form asks for dealership numbers, not locations of stores.
Carmax, specializing in used-car sales, can open a store on any corner with its completely different business model and challenge everyone on the list. Of course, Carmax has its own challenges, as some megadealers such as Sonic andambitiously develop exclusive pre-owned vehicle operations.
Like, showed a big increase in store acquisitions (27), but the revenues did not seem to be commensurate with the acquisitions. It’s possible some of these acquisitions are outside of the U.S. market. Group 1 also has stores in the U.K. and Brazil.
’s average annual revenue per store went down $1.5 million. However, likely due to these acquisitions, it was able to take the No.4 spot from Sonic.
Sonic is the only public and the only group of the top 19 to reduce its dealership count.
On the surface it would appear Sonic is slipping, but that’s misleading. While Sonic’s dealer count went down, its revenues still went up, and it raised average annual revenues per store to $86.6 million, up from last year by $9.6 million per store.
If Carmax is excluded, Sonic leads all publics with per-store revenues and only trails Van Tuyl in the top 10.
No.6 on the list, Van Tuyl is higher than some publicly owned megadealers. It is the benchmark of private-group growth aspirations.
Van Tuyl added only four stores in 2013, but gained nearly $1.1 billion in revenues. The average annual revenue per store is $104.8 million, up $9.1 million from the previous year. Van Tuyl could be a prime candidate to go public.
Simply looking at total annual revenues does not necessarily distinguish who actually may be on the move. For public companies, revenue declines can hurt stock prices, so acquisitions are vital for survival, as organic growth becomes increasingly challenging for big dealer groups.
So the central question in evaluating public companies on acquisition sprees is how much their revenues would have increased if they had not acquired more stores? Would they have gone down otherwise?
Megadealers occupying the No.15-No.19 slots (Koons, Bommarito, Fletcher, Keyes and Braman) added no stores in 2013, yet showed increases in revenues exceeding 10% on average. This represents the same percentage of increase in revenues thatand had, which were aided by acquisitions. The comparison raises questions regarding the quality of the existing operations in relation to revenues per store.
As long as a dealer is not heavily in the fleet business, more revenues usually equals more profitability. A look at the average revenues per store of the top 20 dealers shows the per-store revenues of the privates are about 30% higher on nearly half the number of stores.