After acquiring 18 stores last year, Lithia Motors CEO Bryan DeBoer said the dealership group plans to grow at the same pace in 2017.
"There's a fair amount of supply of available deals right now, so prices have, to some extent, subsided," he said at the Automotive News Retail Forum on Thursday. "We're able to make transactions happen at values that both sellers and buyers are able to pay and sell for."
Lithia acquired the nine-store Carbone Auto Group last year and the 27-store DCH Auto Group in 2014.
Lithia has the "economy of scale that other small groups don't typically have," DeBoer said. "We really believe that with lots of capital in our pockets and the ability to pay top dollar that we're going to be able to continue to grow at that pace from 2017 and beyond."
Lithia typically buys average-performance stores with the intent to share best practices and "unlock value" that hasn't yet been realized, leveraging the talent that's already there, DeBoer said.
"When we buy average performance, we usually believe that there's twice the opportunity within that existing store," he said.
When DeBoer's father, Sid DeBoer, was head of the dealership group, management from the headquarters in Medford, Ore., made decisions for all the group's stores. When Lithia acquired DCH, it operated in the same way, DeBoer said. DCH was making decisions that would be universal through its stores, "rather than allow the entrepreneurial spirit within those stores to really grow and foster in many different ways," he said.
Lithia had just gone through five years of decentralizing the business to allow dealership managers to make independent decisions when it acquired DCH.
"With DCH, that's where we spent our time," DeBoer said, ""How do we decentralize you as an organization and allow your people to have the power they need to take care of their customers?'"
Innovation happens more often within individual stores than from top management, DeBoer said.
"We challenge our store leadership to be able to think for themselves," DeBoer said. "We have almost a half a dozen stores that run a one-price model or a very low haggle in another half a dozen stores or so. I think that innovation occurs because people believe" in their own models.