Holman buys 17 auto dealers, doubling sales to $3B – Philly.com (blog)

Posted: Tuesday, April 12, 2016

Holman Automotive, the largest auto dealer group based in the Philadelphia area with 19 BMW, Ford, Honda, Toyota, Volvo and other dealerships in Pa., N.J. and Florida, says it has purchased Kuni Automotive and an additional 17 Nissan, Cadillac, Subaru, Chrysler and Kia dealerships in five Western states, from the founding Kuni family, its charitable foundation and other owners.

The deal would make Holman to the nation’s seventh-largest car dealer group. Kuni sold 36,000 new, used and fleet vehicles last year and collected $1.43 billion in total sales, according to Automotive News’ yearly list. Holman, which has several businesses in addition to car sales, sold 40,000 vehicles and topped $1.45 billion in sales. The combined companies expect sales over $3 billion, Holman says.

The enlarged firm will be around one-fifth the size of the two largest U.S. auto dealer groups, AutoNation and Penske Automotive Group Inc. Both AutoNation and Penske report sales of more than 500,000 vehicles and $20 billion a year, from more than 250 dealershipss each.

Holman won’t say what it paid. A banker who finances auto franchise deals say dealers typically collect a profit margin of 3.5% to 5% on cars sold, and that a dealership can sell for 3X to 10X its yearly sales, depending on brand (high-end Lexus and BMW and popular Subaru are worth more than Kia or Chrysler) and location (dealers in cheap operating states like Texas are worth more than dealers in higher-cost states like Pennsylvania). Using 6x profits on 3.5% margins, Holman could have paid $300 million or more for Kuni, minus debt.  

Vancouver, Wash.-based Kuni has 6 dealerships in California, 5 in Colorado, and others in Washington, Oregon and Kansas.

In a statement, Kuni Automotive CEO Greg Goodwin said his company chose Holman to build a company “greater than the sum of its parts.”  Holman Executive Vice President and Chief Strategy Officer William Cariss oversaw the transaction and will seek additional acquisitions.

In a statement, Holman CEO Carl Ortell noted this is “a time of consolidation and innovation in the automotive industry.” He said Holman “is well-positioned” to grow all its businesses.

Besides the dealerships, Holman includes Steward Financial Services (car purchase finance); Holman Parts Distribution (multibrand powertrain parts disributor); Auto Truck Group (truck fit-ups); and ARI, which Holman calls “the largest privately-owned fleet leasing and management company in North America.” 

Chairman Melinda K. Holman said the family-owned firm, founded in 1924 by Steward C. Holman, will remain private and Holman-controlled “for generations to come.”   

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