Lithia Motors Inc. final week took a big step towards reaching its expectation so as to add $4 billion in income in 2023 through acquisitions, with the acquisition of 14 franchised dealerships from Dennis Ellmer of Precedence Auto Group in Virginia.
The June 12 Precedence Auto acquisition, which included home, import and luxurious manufacturers, is predicted so as to add $1.2 billion in annual income, Lithia stated. The auto retail large stated it has acquired dealerships representing $3.2 billion in annual income thus far in 2023, most of which stems from its March buy of Jardine Motors Group in the UK.
Lithia CEO Bryan DeBoer instructed Automotive Information this month that the auto retailer “ought to are available in round $4 billion” of added income in 2023 and that its acquisitions below contract have been all within the U.S.
That may imply Lithia has to accumulate dealerships representing about $800 million extra in income this 12 months.
“This deal appears in step with administration’s technique of prioritizing accretive M&A on this market,” Stephens Inc. analyst Daniel Imbro wrote in a June 13 observe to traders.
Ellmer, who stayed on with Lithia and stays CEO of Precedence Auto, individually retained two Lexus shops, Tom Dobry, Lithia’s vice chairman of strategic operations, confirmed to Automotive Information in an e-mail.
A Lithia spokesperson stated Ellmer reached out to the corporate instantly and no brokers have been concerned within the transaction.
The acquisition, which additionally included two buy-here, pay-here dealerships, two automobile shopping for facilities and an authorized used-vehicle retailer, bolsters Lithia’s presence in Virginia, which the auto retailer considers a part of Area 5, the Northeast. It had simply two dealerships in Virginia, representing luxurious and unique manufacturers, close to Washington, D.C.
Precedence’s shops are unfold throughout the Chesapeake, Hampton and Newport Information, Va., markets, plus close to Washington, D.C. It additionally has one location within the southwest a part of Virginia.
The acquisition included three dealerships every of Toyota and Honda, two Chevrolet shops, a Nissan retailer, a Nissan-Mazda dealership and one every of Infiniti, Acura, Hyundai and Ford.
“It is an excellent group of shops,” stated Mike Sims, president of buy-sell agency Pinnacle Mergers & Acquisitions in Frisco, Texas. “As soon as once more, an excellent acquisition for Lithia to proceed to construct out” its footprint.
The transaction marked Lithia’s first U.S. dealership acquisition of 2023 and this 12 months’s greatest deal thus far by way of the variety of dealerships acquired, as tracked by Automotive Information.
DeBoer this month stated the auto retailer’s community improvement, or acquisition, goal for its plan to achieve $50 billion in annual income by the tip of 2025 is now $25 billion in acquired income, up from the beforehand said $20 billion.
DeBoer famous Lithia’s focus areas for future acquisitions are in its Southeast, South Central and North Central areas.
Lithia, of Medford, Ore., ranks No. 1 on Automotive Information‘ record of the highest 150 dealership teams primarily based within the U.S., retailing 271,596 new autos in 2022. Lithia’s gross sales figures embrace dealerships outdoors the U.S.