The Intersection 10-23-22

For the last few years, Lithia Motors has been on a dealership acquisition spree across the country, buying single stores and swallowing large groups whole.

But earlier this month, the fast-growing auto retailer made an acquisition that looked different from all the others: It bought six Airstream stores in the Pacific Northwest from Airstream Adventures.

“[It’s a] very small focus for the company relative to what we’re doing and no real initiative to grow that business other than to really get a feel for what some of these other mobility verticals could look like,” said Lithia CEO Bryan DeBoer on the company’s third-quarter earnings call last week.

This is not the only example of the company stretching beyond automobile retail. Last year, following its entrance into Canada, Lithia bought a Harley-Davidson store in Toronto. On the company’s earnings call for the third quarter of 2021, DeBoer pointed to tractor-trailer mobility and farming mobility as areas where Lithia could overlay its digital e-commerce and network strategies.

Additional diversification seems likely based on comments from DeBoer, which can be found in our Page 1 story.

DeBoer reiterated interest in additional international markets and hinted that the company could look at either building or acquiring customer relationship management systems or dealership management systems.

To be sure, some rival public auto retailers have also ventured beyond traditional business lines.

Group 1 Automotive and Penske Automotive Group both had a U.K. presence for years. Penske also owns dealerships in Japan, has commercial truck dealerships and a stake in Penske Transportation Solutions.

AutoNation, which Lithia passed as the country’s top retailer of new vehicles through the first half of 2022, has also dabbled with diversification.

While AutoNation closed its unprofitable aftermarket collision parts unit in 2020, the auto retailer still has its AutoNation Precision Parts business, which sells branded maintenance and repair parts, and its AutoNation USA used-vehicle stores.

And in July, AutoNation said it will buy indirect lender CIG Financial for $85 million and convert it into a captive finance company.

Dealership acquisitions, digital retail and Lithia’s own captive finance unit were seen as key cogs for the company to achieve its ambitious five-year plan to reach $50 billion in annual revenue by 2025, nearly quadruple 2019’s revenue of $12.67 billion.

Those aspects remain very much in play.

But it appears DeBoer wants Lithia to be not only the biggest group, but the most diversified one, as well.

— Jack Walsworth