Lithia Motors Inc. has acquired three new-car dealerships in Oregon that will add $110 million in estimated annual revenues.
Lithia, of Medford, Ore., said Monday it had purchased the O'Brien Auto Group of Salem in Salem, Ore. Financial terms were not disclosed.
The stores will be named BMW of Salem, Honda of Salem and Volkswagen of Salem.
"These stores fit our strategy of seeking exclusive franchises in the markets we serve," Lithia CEO Bryan DeBoer said in a statement. "The opportunity to deepen our relationship with manufacturer partners like BMW, Honda and Volkswagen is a key to achieving our acquisition growth objectives."
Lithia ranks No. 9 on Automotive News' list of the top 125 U.S. dealership groups with retail sales of 56,960 new vehicles in 2012. Lithia ended 2012 with 87 dealerships and will have 91 dealerships after the latest deal.
This is the first acquisition Lithia has done this year, "but hopefully not the last," John North, Lithia's controller, said in an e-mail.
"At the end of the first quarter, we had approximately $278 million to deploy towards acquisitions, so we have plenty of liquidity to pursue other opportunities," North said.
The company is looking for dealerships primarily in the West, seeking import and domestic brands in mid-sized rural markets and luxury brands in metro markets.
"We're going to be nationwide; it's just a matter of how long," DeBoer said in an interview at the time. "We have a West Coast focus because that's where the bulk of our people are from. But the East Coast is very attractive to us, too."
On April 11, Lithia was granted a franchise to sell Mini vehicles in Anchorage, Alaska. The store will be next to its Anchorage BMW dealership.
"We hope to find additional opportunities with manufacturers in the future," DeBoer said.
DeBoer said Lithia could realistically buy 12 to 13 stores in the next 1 to 3 years. DeBoer said dealership prices and values are high as a result of rising demand for stores as the economy recovers.
"Now that earnings are two to three times what they were during the recession, the amount of dollars to make a deal happen is not as attractive as it was during the recession," DeBoer said. "For every 20 deals we look at, we only buy one."
Most of the markets Lithia targets are small enough to deter competition from a lot of other buyers, DeBoer said, so "we can kind of sit back and that will bring the prices back to our comfort levels."
Lithia shares fell today to $54.83, down 2 percent.
