• AutoNation’s announcement December 4 that it was acquiring six auto stores in Texas, its second most important market after Florida, forms part of the company’s national growth strategy.
• AutoNation operates in 15 states and, according to CEO Mike Jackson, prefers to build its brand network in existing markets rather than expand to new markets. It grows either by acquisitions or by obtaining new franchises from manufacturers. Some recent acquisitions:
• The purchase of Audi, Chrysler, Dodge Ram, Jeep, Porsche and Volkswagen dealerships in the Houston and Dallas-Fort Worth markets, announced December 4, is projected to increase the company’s revenue by about $575 million per year in the Lone Star State, which accounted for 20 percent of revenue last year. The outlets are expected to sell about 14,000 new and used autos this year.
• In early 2011, AutoNation bought a Toyota dealership in Fort Myers with annual sales of $135 million.
• In 2006, the company made its largest purchase prior to the December acquisition: a Mercedes-Benz store in Pompano Beach that had annual revenues of $230 million.
Source: AutoNation
South Florida auto dealers
Despite an agonizingly slow economic recovery, the country’s largest auto retailer, Fort Lauderdale-based AutoNation, is thriving again as demand for vehicles expands.
The company, one of Florida’s largest, is posting increasingly strong profits and revenues. Just last week, in a sign of confidence, Autonation announced a major acquisition — buying six large auto stores in Texas — that will add about 700 employees to its national payroll of 19,400.
In announcing the deal Tuesday, which is expected to provide AutoNation with $575 million in additional revenues next year, the company’s CEO and chairman, Mike Jackson, expressed optimism about the prospects for continued growth in vehicle sales.
“You want to know what I’m thinking, look at what I do,” Jackson told viewers on CNBC’s Squawk Box program.
No information was released on the cost of the transactions, but in recent years auto dealerships sometimes sold for three to five times revenue, which would represent a significant investment for the company.
Tough times
To be sure, AutoNation has struggled through some tough times. It was battered by the Great Recession, which depressed sales and pushed the company into a $1.2 billion loss four years ago. As sales began to improve in 2010 and 2011, it was blindsided by a shortage of Japanese-made cars last year after the earthquake and tsunami in March 2011 shut down Japanese manufacturers of some essential components.
Since then, however, AutoNation has rebounded. Unit sales, revenues and profits all performed well in the first three quarters of this year, and the company expects new vehicle sales to continue their recovery nationwide, rising to the mid-14 million units this year, up from about 12.7 million in 2011. In the third quarter of 2012, AutoNation’s new car unit sales grew by 21 percent over the same period in 2011, doing better than an estimated 15 percent increase industry wide. November’s sales of new vehicles increased by 21 percent over November 2011 .
The big dealerships acquired sell Audi, Porsche, Volkswagen and Chrysler products in the Houston and Dallas-Fort Worth markets. They are expected to sell 14,000 new and used autos this year, and will add substantially to AutoNation’s future sales.
