Group 1 Automotive is only one in a group of firms (AutoNation and Penske Automotive Group are the largest) striving to consolidate US auto sales. The company owns and operates more than 140 franchises at about 110 dealerships, as well as about 30 collision service centers in about 15 US states. More than half of Group 1's dealerships are located in Texas, Oklahoma, and California. Group 1 Automotive also has about 10 dealerships and several collision centers in the UK. The company's dealerships offer new (more than 55% of sales) and used cars and light trucks under some 30 different brands. It also offers financing, provides maintenance and repair services, and sells replacement parts.
The auto dealer rings up about 95% of its sales in the US; the remainder comes from the UK. In Britain it has locations in Brighton, Chelmsford, Chingford, Farnborough, Hailsham, Harold Wood, Hindhead, Southend, Stanstead, and Worthington. In 2013 the company entered Brazil, acquiring 18 dealerships and 21 franchises there.
Group 1 Automotive's operations include four core business segments: New Vehicles (57% of sales); Used Vehicles (24%); Parts & Service (12%); and Finance & Insurance. In the UK the auto dealer operates through its subsidiary Group 1 Automotive UK Ltd.
Group 1's 2012 sales jumped 23% versus 2011 to nearly $7.5 billion, while net income climbed 22% over the same period to more than $100 million. Indeed, in 2012 the auto dealer's sales blew past the pre-recession high in 2007 ($6.4 billion). Driving its strong financial performance were double-digit gains on new and used vehicle retail sales, and in its used vehicle wholesale business. Finance and insurance sales jumped nearly 33%, while parts and service sales climbed 8%. Sales of new vehicles were particularly strong, rising 26% year over year.
Like its rival AutoNation, Group 1 Automotive is focusing on acquiring import and luxury brand dealerships. The Houston-based auto dealer is also expanding internationally, both in the UK (where it already has an established presence) and in Brazil, a new market for the company.
The company's strategy also includes growing its higher margin parts and services business, growing its share of the new and used vehicle market, taking advantage of its size to boost efficiency, and continuing to make strategic acquisitions. In recent years Group 1 has seen import and luxury brands account for an increased share of its business. Indeed, in 2012 they accounted for 81% of its sales mix, with domestic brands contributing 19%. That's quite a switch from 2005, when domestic brands totaled about 36% of sales.
Mergers and Acquisitions
In 2013 it bought Shawnee Mission Kia located in Overland Park, Kansas, to complement its existing BMW, MINI, and Hyundai dealerships in the Kansas City metro area. In 2012 it acquired a Honda franchise and a Volkswagen franchise in Panama City, Florida, expanding its presence in Florida Panhandle. In 2011 it completed 14 franchise acquisitions including a Volkswagen dealership in Irving, Texas, adding to its four existing dealerships in the Dallas metropolitan area. Further adding to its Texas holdings, in June it purchased a pair of dealerships (Ford and GM) in El Paso.
Overseas, in 2013 Group 1 acquired four Ford dealerships southwest of London. Also in 2013 it purchased one of Brazil's largest automotive retailers, UAB Motors Participacoes S.A., for about $47.4 million cash, 1.45 million shares of Group 1 common stock, and the assumption of some $62 million in debt. UAB owns 18 dealerships with an estimated $650 million in annual revenue.