Lithia Motors, a nationwide automotive dealership, plans to continue to grow at the same pace for 2017, according to the company’s CEO Bryan DeBoer.
“There’s a fair amount of supply of available deals right now, so prices have, to some extent, subsided,” he said at the Automotive News Retail Forum on Thursday. “We’re able to make transactions happen at values that both sellers and buyers are able to pay and sell for.”
Last year, Lithia acquired nine-store Carbone Auto Group and the 27-store DCH auto group in 2014.
DeBoer said Lithia has the “economy of scale that other small groups don’t typically have.” He continued on to say, “We really believe that with lots of capital in our pockets and the ability to pay top dollar that we’re going to be able to continue to grow at that pace from 2017 and beyond.”
The company buys average-performance stores with the intent to share their best practices and find the hidden talent, enhancing the talent that is already there, DeBoer said.
“When we buy average performance, we usually believe that there’s twice the opportunity within that existing store,” he said.
When Lithia Motors bought DCH, it operated the same way that Lithia operated when DeBoer’s dad, Sid DeBoer, was head of the dealership group. When Sid DeBoer was head of the dealership group, he ran the management from the headquarters in Medford, Oregon. This location made all the decisions for all the group’s stores. DCH was making decisions to be universal throughout all of its stores, “rather than allow the entrepreneurial spirit within those stores to really grow and foster in many different ways,” DeBoer said.
DeBoer said that the most innovation usually comes from the individual stores rather than the top management individuals.
When Lithia acquired DCH, it had just gone through five years of decentralizing the business to allow dealership managers to make individual decisions.
“With DCH, that’s where we spent our time,” DeBoer said, “”How do we decentralize you as an organization and allow your people to have the power they need to take care of their customers?'”
“We challenge our store leadership to be able to think for themselves,” DeBoer said. “We have almost a half a dozen stores that run a one-price model or a very low haggle in another half a dozen stores or so. I think that innovation occurs because people believe” in their own models.”