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 145 franchises at about 115 dealerships, as well as about 28 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 14 dealerships and several collision centers in the UK and 22 franchises at 18 dealerships and five collision centers in Brazil. The company's dealerships offer new (more than 55% of sales) and used cars and light trucks under some 34 different brands. It also offers financing, provides maintenance and repair services, and sells replacement parts.
Group 1 Automotive's operations include four core business segments: New Vehicles (59% of sales); Used Vehicles (27%); Parts & Service (11%); and Finance & Insurance. In the UK the auto dealer operates through its subsidiary Group 1 Automotive UK Ltd.
The auto dealer rings up about 83% of its sales in the US; the remainder comes from the UK and Brazil. In Britain it has locations in Brighton, Chelmsford, Chingford, Farnborough, Hailsham, Harold Wood, Hindhead, Southend, Stansted, and Worthington. The company entered Brazil in 2013, acquiring 18 dealerships and 21 franchises.
Sales and Marketing
About 70% of Group 1’s 2013 new vehicle sales came from Toyota, Honda, Ford, BMW, and Nissan. Sales of new vehicles bearing Toyota/Scion/Lexus nameplates accounted for more than a quarter of new vehicle unit sales in 2013.
Group 1's 2013 sales jumped 19% versus 2012 to $8.9 billion (a company high), while net income climbed 14% over the same period to almost $114 million. Driving its strong financial performance were double-digit gains on new and used vehicle retail sales, and in its used vehicle wholesale business. Stronger consumer confidence and more dealerships contributed to the increases. Finance and insurance sales jumped about 14%, while parts and service sales climbed 7%. Cash flow from operations rose to $52 million in 2013 on higher net income, gain on dispositions, and a favorable change in working capital.
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. Those countries accounted for 17% of sales in 2013. 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 2013 they accounted for more than 75% 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 2014 Group 1 continued to add to its dealership roster in the US and the UK, though not at the pace it did in 2013. The company in 2013 acquired the Alex Rodriguez Mercedes-Benz dealership in the Houston suburb of League City. Also in the Houston area, the company expanded its Hyundai operations, opening a new South Loop Hyundai dealership. In Southern California, Group 1 bought Heller Ford and Heller Hyundai. Group 1scooped up the Munday Chevrolet and Mazda operations in Houston, Texas. Up the road, the company bought South Point Kia in Austin, where it owns Maxwell Ford, Town North Nissan, and Round Rock Nissan.
Overseas, the company acquired three Elms BMW/MINI dealerships in the UK. The dealership are in Bedford, Cambridge, and Stansted.
In 2013, Group 1 acquired 38 franchises for about $1.3 billion and it sold seven franchises with annual revenues of about $319 million.
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.