Group 1 Automotive Expands in the U.K. with the Acquisition of Four Mercedes-Benz Dealerships

Rhea-AI Summary

Group 1 Automotive (NYSE: GPI), a leading automotive retailer, has expanded its U.K. operations by acquiring four Mercedes-Benz dealerships in Hertfordshire from L&L Automotive. This strategic acquisition adds to Group 1's existing network in the U.K. and is projected to sell over 2,800 new and used vehicles annually, generating $105 million in annual revenue.

The acquisition reflects Group 1's commitment to growing its relationship with Mercedes-Benz and is expected to drive profitable growth. So far in 2024, Group 1 has completed $1.1 billion in acquired revenues, with total acquisitions expected to reach $3.8 billion by the third quarter of the year, including the pending Inchcape U.K. dealership acquisition.

Positive

• $105 million in annual revenue expected from the new dealerships.
• Acquisition adds 2,800 vehicle unit sales annually.
• Enhances relationship with Mercedes-Benz.
• $1.1 billion in acquired revenues year-to-date 2024.
• Total acquisitions expected to reach $3.8 billion by Q3 2024.

Negative

• Integration challenges of new dealerships.
• Potential financial strain from numerous acquisitions.

Insights

Financial Analyst

The acquisition of four Mercedes-Benz dealerships by Group 1 Automotive is a noteworthy strategic expansion, especially considering the premium brand involved. The expected $105 million in annual revenue is significant, indicating a potential boost to Group 1's top line. Importantly, the use of an agency model for new car sales means that revenue is recorded net of the cost of goods sold, potentially leading to better margin stability. Notably, Group 1's expansion in the UK market is consistent with their broader strategy, having already completed $1.1 billion of acquired revenues in 2024 and aiming for a total of $3.8 billion by year-end. This continuous growth in a relatively high-margin market like luxury vehicles could be beneficial for their long-term profitability. For shareholders, this acquisition likely signifies a positive growth trajectory and enhanced market positioning.

Automotive Industry Expert

Group 1 Automotive's decision to acquire additional Mercedes-Benz dealerships highlights their confidence in the enduring appeal of the luxury automotive sector. The Mercedes-Benz brand enjoys strong recognition and loyalty, which can be important in sustaining high sales volumes and margins. Additionally, the acquisition's location in Hertfordshire, north of London, is strategically beneficial due to the region's affluent demographic, which tends to favor luxury vehicles. The synergies from these new dealerships aligning with existing Group 1 locations might also streamline operations and reduce overhead costs. For investors, this move could bolster Group 1's market share in the luxury segment, enhancing their competitive edge.

Market Research Analyst

This acquisition underscores the increasing trend of consolidation in the automotive dealership industry. By acquiring these Mercedes-Benz dealerships, Group 1 Automotive is not only expanding its footprint but also reinforcing its relationship with one of the most prestigious automotive brands. This strategic move could lead to improved economies of scale, better bargaining power with suppliers and enhanced customer loyalty programs. Additionally, the integration with Group 1's existing omni-channel platform might enhance customer experience and operational efficiency. For retail investors, this acquisition could be seen as a strategic alignment with industry trends towards consolidation and growth through acquisition.

HOUSTON, July 1, 2024 /PRNewswire/ -- Group 1 Automotive, Inc. (NYSE: GPI) ("Group 1" or the "Company"), a  Fortune 300 automotive retailer with 206 dealerships located in the U.S. and U.K., today announced the expansion of its U.K. operations with the acquisition of four Mercedes-Benz dealerships located north of London in the county of Hertfordshire from L&L Automotive.  These locations are contiguous with several other dealerships currently owned and operated by Group 1 in the U.K. and are expected to sell more than 2,800 new and used vehicle units annually.  This acquisition is expected to generate $105 million in annual revenues with new cars sales recorded as net revenue under the agency model.    

Group 1's Chief Executive Officer Daryl Kenningham stated, "We are delighted to expand our relationship with Mercedes-Benz while growing our operations in the U.K.  This brand is outstanding and our ability to add these dealerships to our portfolio is a very positive growth action and presents an opportunity to further drive profitable growth for our shareholders."

Year to date 2024, Group 1 has completed $1.1 billion of acquired revenues.  With the pending Inchcape U.K. dealership acquisition, which is expected to close during the third quarter of 2024, total acquired revenues are expected to be approximately $3.8 billion at the time of closing. 

ABOUT GROUP 1 AUTOMOTIVE, INC.
Group 1 owns and operates 206 automotive dealerships, 270 franchises, and 42 collision centers in the United States and the United Kingdom that offer 35 brands of automobiles. Through its dealerships and omni-channel platform, the Company sells new and used cars and light trucks; arranges related vehicle financing; sells service and insurance contracts; provides automotive maintenance and repair services; and sells vehicle parts.
Group 1 discloses additional information about the Company, its business, and its results of operations at www.group1corp.com, www.group1auto.com, www.group1collision.com, www.acceleride.com, www.facebook.com/group1auto, and www.twitter.com/group1auto.

FORWARD-LOOKING STATEMENTS

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, which are statements related to future, not past, events and are based on our current expectations and assumptions regarding our business, the economy and other future conditions. In this context, the forward-looking statements often include statements regarding, our ability to realize the anticipated benefits of the acquisition and our future financial position following such acquisition, as well as our strategic investments, goals, plans, projections and guidance regarding our financial position, results of operations and business strategy, including the annualized revenues of recently completed acquisitions or dispositions and other benefits of such currently anticipated or recently completed acquisitions or dispositions. These forward-looking statements often contain words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "should," "foresee," "may" or "will" and similar expressions. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. Any such forward-looking statements are not assurances of future performance and involve risks and uncertainties that may cause actual results to differ materially from those set forth in the statements. These risks and uncertainties include, among other things, (a) the occurrence of any event, change or other circumstances that could give rise to the termination of the definitive agreement; (b) the risk that the necessary manufacturer approvals may not be obtained; (c) the risk that the necessary regulatory approvals may not be obtained or may be obtained subject to conditions that are not anticipated; (d) the risk that the proposed acquisition will not be consummated in a timely manner; (e) risks that any of the closing conditions to the proposed acquisition may not be satisfied or may not be satisfied in a timely manner; (f) risks related to disruption of management time from ongoing business operations due to the proposed acquisition; (g) failure to realize the benefits expected from the proposed acquisition; (h) failure to promptly and effectively integrate the acquisition; (i) the effect of the announcement of the proposed acquisition on the operating results and business of Group 1 and on its ability to retain and hire key personnel, maintain relationships with suppliers; (j) general economic and business conditions, (k) our cost of financing and the availability of credit for consumers, (l) foreign exchange controls and currency fluctuations, (m) the armed conflicts in Ukraine and the Middle East, (n) the impacts of any potential global recession, and (o) our ability to maintain sufficient liquidity to operate. For additional information regarding known material factors that could cause our actual results to differ from our projected results, please see our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.

Investor contacts:
Terry Bratton
Manager, Investor Relations
Group 1 Automotive, Inc.
ir@group1auto.com

Media contacts:
Pete DeLongchamps
Senior Vice President, Manufacturer Relations, Financial Services and Public Affairs
Group 1 Automotive, Inc.
pdelongchamps@group1auto.com
or
Clint Woods
Pierpont Communications, Inc.
713-627-2223
cwoods@piercom.com

 

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SOURCE Group 1 Automotive, Inc.

FAQ

What did Group 1 Automotive acquire in the U.K.?

Group 1 Automotive acquired four Mercedes-Benz dealerships in Hertfordshire from L&L Automotive.

How much annual revenue is expected from Group 1's new U.K. dealerships?

The new dealerships are expected to generate $105 million in annual revenue.

How many vehicle units are expected to be sold annually from the new U.K. dealerships?

The new dealerships are projected to sell over 2,800 new and used vehicles annually.

What is the financial impact of Group 1's acquisitions in 2024?

Group 1 has completed $1.1 billion in acquired revenues in 2024, with total acquisitions expected to reach $3.8 billion by Q3 2024.

What is the significance of Group 1's acquisition of Mercedes-Benz dealerships?

The acquisition enhances Group 1's relationship with Mercedes-Benz and expands its operations in the U.K., contributing to profitable growth.