Lithia Motors Agrees To Buy DCH Auto Group, Creating Dealership Powerhouse | Edmunds

Lithia Motors Agrees To Buy DCH Auto Group, Creating Dealership Powerhouse


Just the Facts:
  • In a deal announced on Sunday, Lithia Motors has agreed to buy DCH Auto Group, creating a dealership powerhouse that stretches from coast to coast.
  • The deal creates the fifth-biggest dealership chain in the U.S.
  • Lithia Motors has 101 stories in 12 states; DCH current owns and operates 27 dealerships in New Jersey, New York and Southern California.

SOUTH AMBOY, New Jersey In a deal announced on Sunday, Lithia Motors has agreed to buy DCH Auto Group, creating a dealership powerhouse that stretches from coast to coast.

The deal creates the fifth-biggest dealership chain in the U.S. with estimated combined annual revenue of about $7 billion, according to a presentation posted on the Lithia Motors Web site. The deal is targeted to close in the fourth quarter.

Lithia Motors has 101 stores in 12 states; DCH currently owns and operates 27 dealerships in New Jersey, New York and Southern California.

Oregon-based Lithia said in a statement that it would pay approximately $340 million in cash and $22.5 million in Lithia stock to make the acquisition.

"For the past several years, we have been seeking a strategic partner to help us to enter the Eastern United States," said Bryan DeBoer, Lithia Motors president and CEO, in a statement.

The two organizations are complementary. The majority of Lithia's sales are domestic brands. DCH Auto Group focuses on imported cars, primarily Honda/Acura and Toyota/Lexus. The two Japanese brands comprise 82 percent of DCH Auto Group's sales.

"This combination develops a metro market strategy for West Coast-based Lithia, as the DCH stores are located in the greater metropolitan areas of New York and Los Angeles," said the two in a joint statement. "The integration of the DCH team allows the combined organization to pursue two growth opportunities: the exclusive franchise, small-to-medium-size market strategy that is Lithia's hallmark, as well as the large metropolitan market strategy the DCH management team has honed since the 1970s."

The two companies say the combined organization will be able to "leverage best-in-class execution around customer satisfaction, sales volume and cost control."

Proponents of such mega-dealership chains say they offer several benefits to car shoppers, including the standardizing and upgrading of sales and service processes.

DCH dealerships will maintain the DCH name.

Edmunds says: Lithia Motors and DCH Auto Group say they share similar values and goals. Expect this mega-deal to be a win for consumers.

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