Jump to content

Auto Dealership Groups that might be on Buffett's shopping list


DCG
 Share

Recommended Posts

I work in this industry, and nearly all of the large dealership groups (including Berkshire Automotive) are large clients of ours.

 

 

Trying to speculate which dealership might be next on Buffett's shopping list.

 

 

 

Sonic Automotive

Group 1

Penske

Hendrick Auto

Asbury Auto

Lithia Motos

Larry H. Miller

Herb Chambers

 

 

I'd think Sonic or Asbury (both public companies) might be on the top of their list, they seem to be well-run companies and aren't super overpriced right now. I could see them buying Group 1 as well.

 

 

 

 

 

 

Link to comment
Share on other sites

The MO for Van Tuyl / Berkshire so far has not been to acquire large groups.  They have acquired 3 or 4 dealerships since the deal was announced and they are likely to continue their joint venture model where they partner with the selling management team.

Link to comment
Share on other sites

Guest longinvestor

The MO for Van Tuyl / Berkshire so far has not been to acquire large groups.  They have acquired 3 or 4 dealerships since the deal was announced and they are likely to continue their joint venture model where they partner with the selling management team.

+1

LVT and WEB said as much in an interview. With dealers needing to come to them at fair prices, this is likely to be a slow grind

Link to comment
Share on other sites

  • 3 weeks later...

DCG, I was wondering if you could share any thoughts you have on the relative quality of the publicly traded dealerships? I have been doing work on them and to me AutoNation seems to be the gold standard, I really like what they've done with the branding strategy and the fully transactional website they are rolling out.  Would love to hear feedback from some one that works directly with the large dealer groups!

Link to comment
Share on other sites

Anyone have an opinion on Sonic Automotive? $sah

 

-Looks decently priced ~12-13x E.

-Parts + Service Tailwind

-Family-owned /controlled - 50%+ (low liquidity)

-Reinvesting into growth opportunities - temporarily depressing earnings. I figure if the initiatives don't work out, they can simply stop. It's a self-inflicted overhang.

 

 

Link to comment
Share on other sites

Anyone have an opinion on Sonic Automotive? $sah

 

-Looks decently priced ~12-13x E.

-Parts + Service Tailwind

-Family-owned /controlled - 50%+ (low liquidity)

-Reinvesting into growth opportunities - temporarily depressing earnings. I figure if the initiatives don't work out, they can simply stop. It's a self-inflicted overhang.

 

Just started digging in to SAH today - what are your thoughts aside from the above?  after a cursory glance, surprised that their gross margins are so low given their high weighting towards luxury dealerships.  Low EBIT margins and high SGA&A/gross profit not encouraging, but that is an area where they should be able to improve by centralizing store-level processes and standardizing best practices (a la AN's Shared Service Center)

 

I like the increased weighting towards luxury - i believe luxury brands tend to have more/longer OEM warranties, and higher service retention for dealers.  Which should dovetail nicely w/ cyclical P&S tailwind.

 

Will update once i've gone through more of their material

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...