Bryan DeBoer had a big vision for Lithia, made it happen

News

In an automotive retail landscape in the midst of a fast-paced era of consolidation, one group and one executive are operating at a different level: Lithia Motors Inc. and its CEO, Bryan DeBoer.

The longtime head of what is now the nation’s second-largest dealership group has been the guiding force in the transformation of Lithia becoming a national brand not only through acquisitions of single dealerships and large private groups across the country, but also through the rollout of a fledgling omnichannel retailing tool, Driveway.

DeBoer’s execution on his vision for Lithia is among the reasons he was selected among Automotive News‘ 2021 All-Stars as the Industry Leader of the Year.

“It’s a fun journey,” DeBoer, 55, said in an interview this month. “But it’s just the beginning.”

In July 2020, the Medford, Ore., retailer revealed an ambitious five-year plan to reach $50 billion in annual revenue by 2025 — nearly quadruple 2019’s revenue of $12.67 billion — and more than double its store count to a total of 500 U.S. dealerships.

Lithia’s goal is to deliver and service vehicles within any 100-mile radius in the lower 48 states and within a 100-mile radius of 90 percent of the population in Alaska and Hawaii through expansive growth and improved operational developments.The publicly traded company has made significant progress nearly a year and a half since the plan was introduced.

Lithia’s 2020 revenue for the year rose to $13.1 billion. Through the third quarter of 2021, Lithia’s revenue stands at $16.5 billion.

As of Nov. 16, Lithia’s U.S. dealership count stood at 266.

Prior to becoming CEO of the company founded by his father, Sid, DeBoer had been Lithia’s COO and president, senior vice president of M&A/operations and general manager of a Honda dealership in Oregon.

Acquisitions have been a cornerstone for Lithia during DeBoer’s tenure as CEO, which began in 2012, and played a role in him being named an Automotive News All-Star in 2014, 2016 and 2019.

In 2012, Lithia’s dealership count was 87. It hasn’t stopped expanding.

By 2017, that count increased to 169 dealerships. Lithia surpassed the 200 mark last year, reaching 209.

Lithia ranked No. 3 on Automotive News‘ most recent list of the top 150 dealership groups based in the U.S., retailing 171,168 new vehicles in 2020. But DeBoer took it up a notch in April when Lithia acquired Michigan’s Suburban Collection and 34 of its dealerships in one of the largest-ever acquisitions for the company as well as one of the largest automotive retail transactions of the past decade. That acquisition vaulted Lithia past Penske Automotive Group to become the country’s second-largest dealership group going forward.

Just more than four months later, Lithia made another significant acquisition — and went out of the country for the first time — when it bought Canadian retailer Pfaff Automotive Partners.

“I think the biggest learning that we’ve learned all along is know what we know and know what we don’t know,” DeBoer said. “And make sure that you understand that David Fischer [of the Suburban Collection] and his team in Detroit know way more about the Detroit marketplace, the consumers, their associates and the competition than we will ever know. I think that’s even more so stated with Chris Pfaff and Carol [Deacon] and their teams in Canada.”

Beyond those two acquisitions, Lithia this year entered a handful of Southeast states — Mississippi, Alabama and Georgia — further expanding the retailer’s reach in what it refers to as Region 6 and what DeBoer called the shallowest area for the company.

“It does help us be able to grow in that Region 6. … I believe it’s the most lucrative markets in the country — those seven, eight states in the Southeast — and it’s just something that we haven’t been a party to over the last 20, 30 years,” he said. “Now we’re getting a taste of that and really are enjoying what we’re seeing in those markets.”

Lithia said it has acquired stores — including a Harley-Davidson dealership, its first entry into motorcycle sales — representing about $6.5 billion in annualized revenue in 2021 as of Nov. 16. Lithia added about $3.5 billion in revenue from its 2020 acquisitions.

With the Suburban Collection acquisition, Lithia kick- started the parade of megadeals and helped make 2021 the biggest year for dealership mergers and acquisitions in decades.

Fellow public companies Group 1 Automotive, Sonic Automotive Inc. and Asbury Automotive Group Inc. each revealed plans in September to acquire large private groups.

Despite that breakneck pace, DeBoer is quick to point out that the industry remains fragmented.

“It’s also important to remember that the top 10 largest groups have less than 10 percent of the market share of new vehicles in the country,” DeBoer said. “We’re a $2 trillion industry that is quite large and quite unconsolidated. We really believe that at Lithia and Driveway, we have the ability to continue to grow that network out to the 500 approximate stores to really get to that 100-mile density that allows us to really service consumers wherever they choose, whenever they choose and however they choose.”

For Lithia, that could mean further expansion in the Midwest and the South, anchored around Texas.

“Even though we’re in Detroit, we’re really not into the other major population areas like St. Louis and Minneapolis,” DeBoer said. “We’ll probably continue to look for partners in those areas. And then in Texas, Louisiana, Oklahoma, those areas, we have a pretty good presence in Texas, but are still building out in the areas around Texas.”

A growing dealership network is just part of Lithia expanding its reach to U.S. consumers.

Driveway, an omnichannel platform launched in 2020, allows consumers to buy new or used vehicles online with home deliveries. A part of Driveway’s business is buying vehicles.

Omnichannel refers to technology and processes aimed at providing a seamless buying experience for consumers whether they shop online, in-store or both.

DeBoer said Lithia didn’t realize Driveway would have as big of a reach as it’s having today.

“I think some of it’s caused by shortages in new and used inventories,” he said. “Our average car is getting shipped over 930 miles. It’s quite a difference when you have a national brand with Lithia.”

DeBoer noted that nearly 98 percent of Driveway consumers had not done business with Lithia or the omnichannel platform before: “That ability to expand our offerings to new consumers is quite an opportunity.”

Products You May Like

Articles You May Like

Renault, Nissan said to triple investment in EVs
Quick Charge Podcast: January 25, 2022
GM threatens action against any dealerships attempting markups on upcoming EVs
Ally forecasts 15% decline in used-car prices by end of 2023
Former Reynolds CEO Bob Brockman asks U.S. judge to lift $1.4 billion tax levy

Leave a Reply

Your email address will not be published.