Lithia Motors Inc.'s purchase of five stores of Downtown Los Angeles Auto Group caps, but doesn't end, a string of major acquisitions by the group, Lithia CEO Bryan DeBoer told Automotive News.
The Downtown Los Angeles deal will generate about $1 billion in annual revenue for Lithia. More opportunity lies ahead, DeBoer said.
"We still have about $400 million of available capital, which can buy us anywhere from $2 billion to $4 billion in revenue based on how we purchase things," DeBoer said. "In another six months, we'll have another $100 million."
The Downtown Los Angeles deal, which closed Aug. 7, is one of three large acquisitions Lithia has made in the last year. Downtown Los Angeles sells Audi, Porsche and Volkswagen at one store and Mercedes-Benz, Nissan and Toyota in three separate stores in Los Angeles, with a Nissan store in nearby Carson, Calif. The group will keep Felix Chevrolet, the first store founder Nick Shammas owned in 1955, said Erin Kerrigan, managing director of Kerrigan Advisors in Irvine, Calif. Kerrigan advised Downtown Los Angeles on the deal.
The store names will remain the same and longtime COO Elay Sung, 55, will run the group, becoming a Lithia platform vice president, said Kerrigan.
The group, also known as Shammas Automotive Group, ranks No. 55 on Automotive News' list of the top 150 dealership groups based in the U.S., with annual new-vehicle retail sales of 17,683 in 2016. Lithia, of Medford, Ore., ranks No. 4, with annual new-vehicle retail sales of 145,772 in 2016.
DeBoer said increasing the company's value matters more than its rank among its peers. Most of Lithia's stores used to be in small, rural markets. It bought DCH Auto Group in 2014, adding 27 stores in urban markets in New York, New Jersey and Southern California. Since then, DCH has bought five more stores in those markets and Boston, and Lithia has added groups in Pittsburgh and upstate New York.
DeBoer wanted to be in Los Angeles to give Lithia a front-row seat to changes autonomous vehicles and other technology bring to retail. Being there, he said, meant "we could see the evolution of competition in retail and car sharing and all those things firsthand."
As Los Angeles' population increases in density, it might require new infrastructure. DeBoer believes the city has the space to meet that demand, so "it's a good way to see, from the ground level, what change is occurring and be able to respond to it."