WardsAuto Megadealer 100: Revenues Down, Income Up in 2020


Supplier teams within the WardsAuto 2021 Megadealer 100 hit the bottom working in 2021 on the heels of a banner yr in 2020, regardless of decrease revenues and decrease unit gross sales due to the pandemic.

Megadealer 100 sig.pngValue-cutting has offset decrease revenues, together with greater per-unit margins pushed by excessive client demand and low inventories for each new and used automobiles.

Coronavirus-related enterprise shutdowns initially led to the scarcity of recent automobiles in 2020, however the scarcity continues in 2021 and doubtless into subsequent yr due to the present scarcity of pc chips.

Whole revenues have been about $59 million for the common U.S. dealership in 2020, down 4.2% vs. 2019, in response to the Nationwide Vehicle Sellers Assn. However whole bills declined 5.6% on common to $6.6 million. Consequently, pretax web revenue per dealership elevated 48% for the yr, to $2.1 million, NADA says.

The present excessive imbalance between provide and demand might be “transient,” says Heath Byrd, chief monetary officer of Sonic Automotive.

Sonic, primarily based in Charlotte, NC, is No.6 within the WardsAuto 2021 Megadealer 100, primarily based on whole annual income for 2020. Nevertheless, decrease inventories most likely are a “new regular” within the new-car division, even after manufacturing catches up with demand. 

“The producers are seeing the profitability of getting a decrease days-supply,” Byrd says in a June 18 telephone interview. “They earn more money. They don’t should incentivize the automobile. They realized from COVID. It’s a greater method of doing enterprise.”

Sellers have reached the identical conclusions. “I might by no means want for this pandemic. It is a horrific, horrible factor that we’ve gone by,” Mike Jackson, CEO of AutoNation, says in a convention name in April.

“However when you ever needed a case examine of what the world appears to be like like when you did it completely different, this previous yr is that this second, and all of this yr might be it. The record of advantages, each on the producer, provider and retail degree, with a bit of adjustment right here and there, is appreciable, and it’s lengthy,” he says.

Sonic Automotive is on a marketing campaign to realize $25 billion in annual income by 2025 – greater than double its 2020 whole of about $9.8 billion, and a quantity that will have surpassed No.1 AutoNation within the 2021 Megadealer 100. AutoNation, primarily based in Fort Lauderdale, FL, had whole annual income for 2020 of about $20.4 billion.

Many of the deliberate progress for Sonic Automotive comes from its used-car-only model, EchoPark, Byrd says. By 2025, Sonic plans to have 140 EchoPark areas nationwide, up from 24 at present, he says.

Of Sonic’s $25 billion purpose, $14 billion would come from EchoPark, with the opposite $11 billion coming from Sonic’s franchised community, Byrd says. In contrast with the goal for EchoPark, that will be a comparatively modest enhance. The group’s franchised dealerships accounted for $8.3 billion in 2020 revenues. The extra income is to be achieved although each natural progress and acquisitions, Byrd says.

Lithia Motors of Medford, OR, is on a fair larger progress marketing campaign. Lithia is capturing for $50 billion in annual income by 2025, up from $13.1 billion within the WardsAuto 2021 Megadealer 100, for 2020.

To get there, Lithia says it expects so as to add $3 billion to $5 billion yearly in further revenues by acquisitions. The opposite main items of the rise come from Lithia’s Driveway on-line commerce platform, and from natural progress from its present seller community.

That charge of progress would make Lithia greater than twice AutoNation’s present dimension. Lithia is No.2 within the WardsAuto 2021 Megadealer 100, up from No.3 a yr in the past.

Lithia continues to be on a sizzling streak, including the Troy, MI-based Suburban Assortment in April 2021, representing $2.4 billion in further annualized revenues. The Suburban Assortment is No.19 within the WardsAuto 2021 Megadealer 100.

Regardless of the high-profile, large-volume strikes among the many publicly traded new-car retailers, privately held teams account for the largest variety of mergers and acquisitions, says George Karolis, president of the Presidio Group, a seller brokerage agency primarily based in Duluth, GA, and San Francisco. The Presidio Group was the Suburban Assortment’s adviser within the sale to Lithia.

“It’s throughout the board. There are tons of of patrons,” Karolis says in a telephone interview. “A majority of them are personal; nine-tenths of them are personal.”

That ought to account for loads of motion within the WardsAuto 2022 Megadealer 100.

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