Lithia Motors Inc. on Tuesday said it has acquired the Troy-based Suburban Collection dealerships, connecting its 56 franchises to one of the largest auto retail networks in the country.
The sale that closed Monday to one of the biggest dealership groups in the country is one of the largest franchise transactions in auto retail at a time of increasing merger-and-acquisition activity in the industry. Details of the sale were not disclosed.
Under Lithia, Suburban dealerships will continue to be the Suburban Collection, but customers will have access to Lithia’s growing Midwest footprint, including service locations, parts availability and choices in new and used vehicles.
Over the next two to three months, Suburban customers also will gain access to its e-commerce platform, Driveway, to buy and sell vehicles online and schedule a service appointment that will pick up and drop off their vehicle at their home.
“We’re very excited about Driveway and (the) expanded reach it will provide The Suburban Collection,” Lithia CEO Bryan DeBoer said in a statement. “I know Suburban’s loyal customers and incremental new customers are going to love it.”
An acceleration in industry trends over the past year amid the COVID-19 pandemic toward digital retail experiences — and as automakers are at the cusp of a transformation toward electrified vehicles — has increased sales of dealerships, often aging family businesses. Meanwhile, larger enterprises are seeking to build scale so they can invest in new technologies that offer more customer convenience and grow inventory that draws more business.
“A tradition is carried on when like-minded professionals work together to ensure a vision is continually realized,” David T. Fischer, chairman of Suburban Collection Holdings, said in a statement. “This new partnership will ensure our customers are served like never before and our team members are afforded new opportunities for growth and advancement.”
Lithia has been on a buying binge, scooping up dealerships across the country with combined annualized revenues of about $6.5 billion since it announced its five-year plan in July to generate $50 billion in revenue and earnings of $50 per share by 2025. The publicly traded Oregon-based dealer reported $13.1 billion in revenue for 2020, up 3.6% from 2019.
The Suburban Collection is expected to contribute $2.4 billion in annualized revenues and is the 12th largest privately owned dealership group in the U.S. based on revenue, Lithia said in a news release. The acquisition offers the group its first major platform in the northern central United States with more than 34 locations across 33 brands with 2,250 employees.
Suburban CEO David Fischer Jr. will remain the collection’s top official as group vice president and expand its footprint under Lithia.
“I am honored to continue to lead The Suburban Collection team, backed by the enhanced technology, selection and financing options Lithia brings with its ownership,” Fischer said in a statement.
Lithia made the acquisition using capital raised in equity and debt offerings late last year.
The transaction combines two companies tracing their roots to the 1940s. The Fischer family founded Suburban Motors in 1948 as a single Oldsmobile dealership and says the company now sells one in every 10 vehicles purchased in southeast Michigan. Lithia’s 75th anniversary is this year.
“The Suburban Collection is a leader in the Midwest automotive retailing sector and a respected fixture in its local communities for more than 70 years,” DeBoer said. “David Fischer, Jr. and his father, David T. Fischer, have earned a phenomenal reputation over those seven decades for taking excellent care of their customers, team members, and local communities.”