Revenue gains in 1999, despite flat used-vehicle sales and soft stock-market prices in the sector, prompted optimistic forecasts for this year from leading publicly owned dealer consolidators.
Top megadealerInc. says the 418-store chain is on track to improving profitability. It expects to raise Internet sales from about 46,000 units in 1999 to 70,000 this year for $1.5 billion more in revenue.
's net profit of $288.7 million last year from continuing operations compares to $225.8 million in 1998, when its auto retail revenues amounted to $12.6 billion.
UnitedAuto Group, under the new ownership team headed by Chairman and CEO Roger S., reached the $4 billion revenue mark.
This jump from $3.3 billion in 1998 produced a $26.7 million net profit at 63 dealerships, after a loss of $797,000 in 1998 under then-chairman Marshall S. Cogan. UAG has 104 franchises.
"We experienced solid growth in 1999 and are looking for a continuing gain of 8% to 10% in revenues and profits in 2000, with a target of $4.4 billion in gross income," says Mr., a former Detroit area Chevrolet dealer who has achieved a national reputation as an auto engine supplier and racing enthusiast.
The 98-franchiseAutomotive chain announced $2.5 billion in revenues for last year, up from $1.6 billion the previous year.
Six newly completed dealership acquisitions will account for $290 million in annualized revenues, about half of a goal of $600 million added income forthis year, says B. B. Hollingsworth, Jr., chairman, president and CEO.
Group 1 boosted its net income 62% in 1999 to $33.5 million and has averaged a 35% growth rate in every year since it was founded in 1996, according to its chief financial officer, Scott L. Thompson.
All consolidators slowed down their dealership buying. That's partly in response to the slide in their New York Stock Exchange prices from the 1996-98 period in which they scooped up auto retailers at a breakneck pace.
Says Mr. Thompson, "We are trying to bolster our regional platforms and are holding off on more purchases for the present, although there are a lot of great opportunities out there in major markets."
Three factors have contributed to investors' negative view of consolidators' stocks, says Mr. Hollingsworth.
* The "underperformance" of top-volume consolidator AutoNation.
* Increased interest rates.
* The "unknown" impact of the Internet on auto retailing.
Group 1's latest acquisitions include the Boston-based Ira Automotive Group, with 10 franchises. Other recent acquisitions are Victory Dodge, Medford, MA; New Orleans' Bohn Automotive Group, with five franchises; Keyand Shamrock Chevrolet, Pensacola, FL, and Benchmark Mercedes-Benz, Oklahoma City.
UAG early this year purchased two stores: Long, Jacksonville, TN (renaming it Landers Ford North as part of its Little Rock, AR-based platform) and Mercedes-Benz of San Diego, Kearny Mesa, CA.
In the largest recent single acquisition by a consolidator,take over the 29-store FirstAmerica chain of northern California and Nevada.
Sonic CFO Theodore M. Wright says that boosts the firm's annualized "run rate" to a projected $6 billion for 2000. It could push it into first runner-up position behind AutoNation among all consolidators.
Sonic's 1999 net profit rose 141% to $44.7 million. Sonic more than doubled its 1999 revenues to $3.4 billion as it acquired 73 dealerships, raising its franchise total to 165.
Inc.'s total revenues for 1999 advanced 74% from the previous year's $1.2 billion. Lithia's 41 stores in six Western states raised the group's net profit 78% to $19.1 million.
Lithia President and COO M.L. Dick Heimann says the consolidator purchased 13 stores last year, bringing its franchise total to 98.
"Lithia is well-positioned to continue its current disciplined growth," he says, adding that it's working with $115 million to do that. AutoNation has made no acquisitions since early 1999. Instead, it has concentrated on Internet development and its first two metro pilot operations - Denver and Tampa, FL. The former rolled out Dec. 26 under the "Autoway" label at 12 locations.
The CarMax Group of Circuit City Stores Inc. reported January sales of $163.2 million, an 18% rise from the comparable 1998 month.
Circuit City Chairman Richard L. Sharp says CarMax would show "break-even to modest-loss results" for the company's 1999-2000 fiscal year, which ended Feb. 29. CarMax lost $5.4 million in fiscal 1998-1999.
Continuing to add franchises in or near its 38 used-car superstores, CarMax for the first time built a new-car facility.
It's the Laureldealership adjacent to its superstore in Laurel, MD, between Baltimore and Washington, DC. CarMax now has 20 new-car franchises. Its original plan was strictly to sell used vehicles.