Used Car Dealerships Buffalo Ny – One of the largest groups of car dealers in the country wants to make a breakthrough in the Buffalo Niagara region. Lithia Motors recently bought Ray Laks Honda at Orchard Park and Ray Laks Acura at Amherst. As an Oregon-based company, Lithia will face rooted local car sales groups.
Time will find out whether Lithia sets more than just a foothold in the Buffalo Niagara region, and how well the company’s tariffs are on domestic competition. Several other dealer groups based outside the city are trapped here. Some haven’t.
Used Car Dealerships Buffalo Ny
Lithia doesn’t rule out making more acquisitions here. “As long as something meets our criteria, we will be open-minded for more,” said Tom Dobry, chief marketing officer.
Some large dealer groups dominate many new cars in the region: West Herr, Northtown, Towne, Basil, and Transitowne. They cover the market with many brands, locations and advertisements, and they have grown through their own acquisitions.
Enter Lithia, who keeps Ray Laks’s name at the two dealers that were bought. There is no doubt the resources that Lithia can use – the company reported a profit of $ 245 million in 2017 – but the company still has to compete with established local players.
And if you want to expand the Buffalo Niagara area – where a stagnant population means the automotive market is not getting bigger – he has to do it by convincing existing traders to sell.
Frank Downing Jr., president of Towne Automotive, said the Buffalo Niagara area has shown affinity for village brands, in various businesses. When it comes to selling vehicles, the region “has a strong local dealer group that has developed strong employees and built a loyal owner base that is difficult to penetrate,” he said.
Local dealers are also active in the community, which makes an impact, said Downing. “When was the last time you went to a community event or a charity event and you didn’t see involvement from a local dealer?” he says.
Mega channel groups may also prefer markets in other countries where their return on investment and return on sales have historically been higher, Downing said. Other markets may grow in the population, compete with fewer per capita traders, and face fewer regulations, he said.
Zeigler Auto Group, which is privately owned and based in Michigan, bought Don Davis Honda at Amherst in 2013. While Zeigler has locations in Michigan, Indiana and Illinois, it never expanded the existence of Buffalo Niagara outside of one location, far from its base. Zeigler recently sold a Honda dealer to Northtown.
Meanwhile, Albany-based Lia Automotive Group continues to compete in the region, through its dealerships on Transit Road in Clarence, and Adams-based Fuccillo Automotive Group has three dealers on Grand Island.
Downing said it was too early to say what impact Lithia had on local car sales. But unlike AutoNation and Ziegler, “I believe Lithia is here to stay and they will develop quickly,” he said. “Lithia has been successful in the Northeast and they seem to have an appetite for growth in Buffalo.”
The seller of another publicly traded car, CarMax, plans to open a superstore in Amherst, but has not announced the opening date. His business focuses on selling used vehicles.
Lithia’s arrival reminded a group of publicly traded sellers who had come to the Buffalo Niagara market more than two decades ago. In 1997, the Florida-based company known as AutoNation bought Al Maroone Ford in Clarence, as part of a larger agreement. The company left the area in 2006 when it sold dealers to Dave Smith Ford.
Dobry said Lithia likes middle markets like Buffalo, and said Honda and Acura tend not to overdealer certain markets.
“Pie is big enough for everyone,” he said. “We really emphasize and value customer retention. We don’t have to win so many businesses like taking care of customers who are there.” (There are a total of four Honda dealers in the region, and one Acura dealer.)
When Lithia considers purchasing a dealer, the company looks for a good store with a good brand, location and team, and the right price for investment, Dobry said. The shop must also have several opportunities “upward”, he said.
“If it’s a shop that does very well, then it’s not a good investment,” he said. “We didn’t buy it for that purpose. We bought it to improve performance.”
It’s just that, don’t look for Lithia’s name which is scattered on the local dealer signs. Litia continued to use the name Ray Laks, a practice that had been followed in other cities where he had obtained a location.
“We really want to maintain the local brand identity that these families have set,” Dobry said.
Despite its mammoth size, Lithia is not trying to micromanage the operations of myriad dealers from Oregon, Dobry said.
“We empower general managers who lead our stores [with] full autonomy to make all their decisions locally. We are a very decentralized company.”
The dealer made his own decision about recruitment and how many vehicles were ordered, he said. Lithia also likes to maintain a team of permanent employees who work in the location purchased.
But operations such as dealer Ray Laks can leverage resources, advice, and potential cost savings from large owners such as Lithia, Dobry said. Lithia may provide guidance on selling more used cars, expanding dealer financing options, or allowing employees to enter lower healthcare costs, he said. The company can also provide technology behind the scenes to make dealer business operations run more smoothly, he said.
“There are clear benefits and benefits that we will bring to them,” Dobry said.
The Litia car sales empire began modestly, with a Walt DeBoer dealer opened in 1946 in Oregon. The company continued to grow and go public in 1996. Grandson DeBoer Bryan became CEO in 2012, and he has encouraged an acquisition party. During 2017, Lithia bought 15 stores and opened a store, predicting the addition will generate more than $ 1.5 billion per year in additional revenue.
Last year, Automotive News’s Lithia ranking ranked No. 4 among the largest dealer groups in the country, based on 145,772 new retail vehicles it sold at 154 dealers in 2016. That rate was nearly 400 per day.
Lithia’s complete financial picture is even greater. Joint revenues from all departments – including vehicles sold, finance and insurance, workshops, parts and services – were $ 8.7 billion in 2016, according to Automotive News.
Local West Herr is No. 22 on the Automotive News list, with 29,486 new retail vehicles sold, and $ 1.8 billion in overall revenue.
As a public company, Lithia discloses its financial results every three months and is responsible to shareholders. Lithia recorded revenue of $ 10.1 billion in 2017, up 16.2 percent from the previous year. Lithia projects that two Ray Laks dealers will add $ 140 million in annual revenue to the company. For 2018, the Lithia project will generate revenues of $ 11 billion to $ 11.5 billion.
Lithia now has 171 stores representing 30 brands in 18 states. In the latest edition of the Fortune 500, which ranks US-based companies with annual income, Lithia is No. 318, one place behind Expedia and one place in front of Avis Budget.
Operating as a public company is “a source of capital,” Dobry said. “It continues like that, but the existing shop also produces that.”
And because Lithia is publicly traded, Litia’s dealer employees can buy shares and “feel like they have direct benefits from the company’s success,” Dobry said. He feels that opportunities help attract good managers and retain employees.
The company has developed into other Eastern markets, including acquisitions in northern New York. Lithia bought Armory Garage at Albany and the Utica-based Carbone Auto Group. Through the Carbone agreement, Lithia became aware of the opportunities at the west end of the country, culminating in an agreement with Ray Laks, said Dobry.
Is there more to come?
“Now we see the type of filling in some markets that we don’t enter,” he said. “That doesn’t mean Buffalo is more important than Kansas City. It’s just a question of when the right opportunities are available in those markets.”
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