Sonic Automotive just acquired stores in two of the fastest-growing markets - southwest Florida and Las Vegas, NV.
The acquisitions add impetus to Sonic's new status as the third-largest publicly owned dealership consolidator.
But other consolidators have been busy, too, both at making new acquisitions and at making money in the first half of the year.
Sonic's gross revenues of $1.3 billion in the first half of 1999 surpassed the $1.1 billion reported byAutomotive and reversed 1998's finish in the megadealer standings.
edged out Sonic for all of last year by $1.74 billion to $1.60 billion, with both finishing far behind but closer to second-place United Auto Group in the publicly owned sector.
Megadealer leaderboosted its revenues to $9.6 billion from $5.5 billion in the first half.
Houston-based Group 1, despite ceding its third-place spot to Charlotte, NC-headquartered Sonic, joined other major publicly owned consolidators in highly optimistic reports and forecasts on the basis of first-half financial results.
Revenues and profits rose for all substantially in the January-June period, as follows:
* Republic Industries, $9.6 billion, up 75%.
* United Auto Group, $1.95 billion, up 21%.
* Sonic Automotive, $1.3 billion, up 103%.
* Group 1 Automotive, $1.1 billion, up 63%.
*, $531.9 million, up 66.4%.
With the acquisition of the Freeland Automotive Group in "hub markets" Fort Myers and Naples, FL, plus Integrity Dodge in Las Vegas, Sonic estimated that its annualized gross-income "run rate" would surpass $3.5 billion.
This would top last year's $3.3 billion in gross revenues at UnitedAuto, which ranks second on the Ward's Dealer Business Top 100 Megadealer survey.
Roger S. Penske, the new chairman and CEO of UAG, is optimistic about the 61-dealership group's prospects following issuance of the once-beleaguered firm's first-half report.
"The $83 million cash infusion into UAG by Penske Capital Partners and our improved performance in the second quarter have positioned UAG for operational and strategic changes that will enhance the company's profitability," Mr. Penske says.
He adds, "Our dealerships showed good growth in the second quarter. We've reorganized into five geographic regions and are relocating our executive headquarters from New York to Detroit so that I can keep closer ties to the UAG operation.
"There is no sign of a slowdown and we are adding or upgrading, and facilities in Arizona, Tennessee, Texas, Mississippi and Puerto Rico."
Group 1 Chairman, President and CEO B.B. Hollingsworth, Jr., is equally bullish.
Purchase recently of the Gene Messer Automotive Group dealerships in west Texas has boosted the Group 1 run rate to $2.3 billion, he told a press conference, "with earnings growth (to $169.9 million gross and $15.3 million net in the first half) significantly outpacing revenue growth."
For its part,boosted its first-half gross earnings from $50.0 million to $83.9 million and its net profit from $2.3 million to $5.1 million.
Lithia, based in Medford, OR, and focusing on dealerships in medium-sized markets in western states, said its 13 newest stores improved same-store sales by 10.6% and pretax profits by 40.0% in the first half of 1999.
Lithia entered the Colorado market in the second quarter with addition of the seven-store Moreland group. It has 83 franchises at 36 dealerships.
Sonic Chief Financial Officer Theodore M. Wright says the moves into Fort Myers and Las Vegas furthered the group's strategy for entering areas "with attractive demographics for auto retailing."
In Fort Myers and Naples, Sonic obtains with Freeland the dealership's, , Mercedes-Benz, and Volkswagen franchises.
Sonic also owns stores in five other Florida markets -AutoNation's backyard since the No. 1 meganetwork is based in Fort Lauderdale.
AutoNation's first-half gross income of nearly $10 billion produced $155.5 million net profit. That compares to $81.9 million in the same period of 1998.
Co-CEO Steven R. Berrard says AutoNation sold over the Internet more than 16,000 vehicles in the first half. He adds that the complete inventory of the superchain's 412 franchises would be available nationwide on Auto-Nationdirect.com in the fourth quarter.
One of the key architects in building the AutoNation network is rewarded with the company's presidency as the news of the banner first-half revenues emerged.
He is Michael E. Maroone, 45, the company's former auto retail group president and before that president and CEO of the Maroone Group dealerships in south Florida and New York.
Mr. Maroone, who also became chief operating officer of AutoNation, sold his group to the mega company in 1997.
AutoNation resumed its dealership acquisition policy late in the second quarter, buying 16 dealerships in California, Colorado, Florida, Texas and Washington and raising its dealership count to 276.
AutoNation also is buying four factory-ownedstores in Fort Worth, TX, in the wake of Texas' new ban on factory ownership.
No present plans call for linking up Roger S. Penske's six dealerships in southern California and the 61 owned by his newly acquired United Auto Group, although a merger at a future date has not been ruled out.
So says Penske Corp. executive vice-president Walter P. Czarnecki, who oversees the dealerships for his one-time partner in a metro Detroit Chevrolet store.
Mr. Czarnecki discussed future plans after the first UAG shareholders meeting presided over by Mr. Penske, the auto racing, manufacturing and dealership executive.
Mr. Penske, 62, became chairman and CEO of UAG after his Penske Capital Partners invested $83 million in sorely-needed cash.
"We first want to keep the six Penske stores as a 'best practices' model for the UAG network," Mr. Czarnecki tells Ward's Dealer Business. "Roger's son, Greg, runs the six California dealerships, and also is contributing to our changes in the UAG operation."
One of Mr. Penske's first moves is to reorganize UAG into five geographic regions led by dealers.
Financier Marshall S. Cogan founded UAG, but ran into financial problems. That's when Mr. Penske stepped in with the cash infusion this year.
Sam DiFeo, owner of several New Jersey dealerships, was UAG's president and chief operating officer under Mr. Cogan. Mr. DiFeo retains that title under Mr. Penske.
At the shareholders meeting, held in Dearborn, MI, UAG announced a new $1 billion financing line withFinancial, of which $750 million will go for inventory financing and $250 million for working capital and acquisitions.
Mr. Penske first got into the business as a Chevrolet dealer in Philadelphia in the 1960s. Then he went to the Detroit suburb of Southfield where he ran the Chevrolet dealership with Mr. Czarnecki.
Mr. Penske's California dealerships include the largest-volumedealership, Longo Toyota, El Monte; Longo Lexus, also in El Monte; Penske Toyota, Downey; Penske Motor Cars, a Mercedes-Benz store, and Penske Jaguar, both of West Covina, and Penske Honda, Ontario.
Kmart Auto Centers were renamed Penske Auto Centers after their purchase by Penske Corp. in the mid-1990s.
Because of that there was speculation that with Mr. Penske now controlling UAG, second largest public-owned megadealership chain might be renamed to Penske as well.
But though no retitling is in the offing, the executive offices of UAG are being moved from New York City to the Penske Corp./Detroit Diesel headquarters on Detroit's east side.
Administrative functions, says Mr. DiFeo, are being relocated across the Hudson River to his base near Jersey City, N.J.