“Our goal isn’t to grow quickly,” Hult said. “Our goal is to grow thoughtfully and be great capital allocators for our shareholders.”
Asbury’s plan would have it adding 75 or so more dealerships with annual new-vehicle sales rising significantly.
Asbury ranked No. 5 on Automotive News‘ most recent list of the top 150 dealership groups based in the U.S., with retail sales of 109,910 new vehicles in 2021. But that number understates just how big Asbury has become. For instance, sales gained with the Larry H. Miller purchase, which closed in mid-December, are barely reflected in that count.
Sales in the first quarter of 2022 provide a clearer picture.
Asbury last week said it sold 39,174 new vehicles during that three-month period, up 44 percent from a year earlier. That was higher than the 29,498 new vehicles reported sold in the U.S. by Group 1 Automotive Inc., No. 4 on the Automotive News list.
It also likely was higher than U.S. new-vehicle sales by No. 3 Penske Automotive Group Inc. Penske doesn’t break out U.S.-only figures but said generally 65 percent of its new-vehicle sales come from the U.S. Given that, Automotive News estimated that Penske sold about 30,000 new vehicles in the U.S. during the first quarter.
AutoNation Inc., No. 1 based on 2021 sales, reported selling 56,442 new vehicles in the U.S. during the first quarter, while fast-growing Lithia, No. 2 based on 2021 results, reported new-vehicle sales of 64,942 for the period, including a small but undisclosed number sold in Canada.
It’s not clear whether those patterns will persist. Asbury also sold seven stores between mid-February and April 1, and those divestitures, in the absence of new acquisitions, will reduce its new-vehicle sales pace.
But it’s evident that Hult’s plans for Asbury are big and bold.
“It was a very strong message,” analyst Daniel Imbro of Stephens told Automotive News. After hearing Hult and other company leaders talk about the plan, “I felt more confident that they could get there.”
Seaport Research senior analyst Glenn Chin last week called the increase from the dealership group’s previous target of $20 billion surprising.
But while “definitely ambitious,” the $32 billion plan is feasible, Chin said.
J.P. Morgan analyst Rajat Gupta said the aggressive targets set by Asbury and Lithia, which seeks $50 billion in revenue by 2025, shouldn’t pressure the other four major public groups into similar declarations. While they’ll think about their capital allocation and business plans, they likely won’t jettison their individual growth strategies in response, he said.
The others have comparable abilities and opportunities and are probably taking similar actions, just not announcing it, Gupta said.