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2016 Saw Growth for Retailers, Auctions

2016 Saw Growth for Retailers, Auctions Featured

This was the year that the publicly traded franchise groups decided to get into the used-car business in a big way by opening their own dedicated superstores.

Penske Automotive Group became the latest when it signed an agreement in December to acquire CarSense, a stand-alone specialty retailer of used vehicles in the U.S. 

CarSense has been in operation since 1997 and has five locations operating in the Philadelphia and Pittsburgh, Penn., market areas, including southern New Jersey.

The Penske move came about a month after AutoNation Inc. announced it would launch AutoNation USA, a chain of standalone pre-owned vehicle sales and service centers.

AutoNation has identified 25 AutoNation USA potential sites in its existing markets, of which five are expected to open in 2017.

Not all these efforts have worked out for the parent companies.

Asbury was one of the first public dealership groups to launch a standalone used-car brand. It has also been the least successful, so far.

During the company’s third quarter earnings call, Asbury executives announced plans to scale down the scope of its Q used-car stores.

What was originally intended as a chain of standalone operations will now become a brand addition for existing stores.

“It’s an area where, quite frankly, we didn’t live up to our internal expectations,” said Asbury CEO Craig Monaghan.

“And it’s going to get a tremendous amount of focus from us as we move forward.”

Asbury’s history in the used-car business is spotty. In 2002, the company entered into a joint-agreement with Wal-Mart on a venture called Price 1.

It was an attempt to sell cars at select Wal-Mart locations.

The Price 1 stores closed after a year.

Asbury will continue to operate the existing Q stores in Florida and does plan on extending the brand to stores in additional states.

There was plenty of expansion on the wholesale side this year, as well.

ADESA grew at a rapid pace, adding by acquisition and opening a greenfield to serve the Chicago market.

The growth started in February, when ADESA bought eight auctions owned by the Brasher family for approximately $283 million in cash.

ADESA then acquired Sanford Auto Dealers Exchange  and Ocala Auto Dealers Exchange in Florida. The Ocala sale merged with ADESA’s existing Ocala auction.

In the fall, ADESA officially opened its new ADESA Chicago auto auction. ADESA invested approximately $40 million to develop the auction, which hosted its first sale Oct. 28.

ADESA further expanded in the Midwest by acquiring Flint Auto Auction in Flint, Mich.

 

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