Asbury Automotive Group Inc. - Company Profile, Information, Business Description, History, Background Information on Asbury Automotive Group Inc.

Three Landmark Square, Suite 500
Stamford, Connecticut 06901

Company Perspectives:

Asbury Automotive Group is about more than selling cars--much more. It's about getting and keeping "Customers for Life" by redefining the automotive buying and service experience. We're building long-term relationships by giving car buyers a fair deal and satisfying all of their automotive needs, from financing and insurance to maintenance and repair ... and then, their next car. Asbury's strategic goal can be summed up as "the best dealers in the best markets with the best brands." Ultimately, though, Asbury is about Merging Visions--the perspectives and industry know-how of hundreds of veteran car dealers, the business savvy of world-class automotive and retailing executives, and even the aspirations and philosophies of successful dealers we'd like to acquire. By Merging Visions, we're all better off--including our customers and our stockholders.

History of Asbury Automotive Group Inc.

Asbury Automotive Group Inc. is the fifth largest automobile retailer in the United States. Its ten regional "platforms," or groups of dealerships, work to achieve economies of scale on such items as newspaper advertising. The company markets 36 different brands of new cars; luxury cars and mid-line imports accounted for a little less than two-thirds of sales. The company operates approximately 100 dealerships in ten states (Arkansas, California, Florida, Georgia, Mississippi, Missouri, North Carolina, Oregon, Virginia, and Texas) and is looking to continue its growth by acquiring more multi-location dealers in booming metro areas.


Tom Gibson, a former president of Subaru of America Inc., formed Asbury Automotive Group in January 1995. The venture, which was backed by the Toronto investment group Onex Corporation, was a means to build a chain of "megadealers," or automobile retailers with annual sales of $150 million or more. Onex's holdings were diversified and included Sky Chefs, Purolator Courier, and three leading auto suppliers (Automotive Industries, Dura Mechanical, and R.J. Tower Corporation). Asbury was originally based in Conshohocken, Pennsylvania.

Asbury allowed the owners of the dealerships it bought to keep an equity share (between 30 and 49 percent) of the businesses while they continued to manage them. It also sought to identify their "best practices" and share them with its other dealers. "By Merging Visions," according to the company's online vision statement, "we're all better off." Asbury's offers had appeal for retiring owners whose dealerships were too large to sell to local competitors. Asbury sometimes bought single stores to add to its existing chains, buying all the shares of these units.

In February 1995, Asbury formed a joint venture with Jim Nalley Auto Group, which owned 11 dealerships in the Atlanta area. The purchase of Plaza Motors, a luxury auto mall in St. Louis, followed the next month. In August, Asbury acquired a 70 percent interest in the David McDavid Auto Group, a $500 million business in Dallas with 14 dealerships and 17 branches. This brought Asbury's annual sales to $1.3 billion. McDavid Auto, which was officially renamed Asbury Automotive of Texas Ltd. after the acquisition, had been formed in Houston in 1936 and had been family-owned for three generations.

Later in 1995, Timothy Collins, the investment manager in charge of Asbury at Onex Corporation, formed his own company, Ripplewood Holdings L.L.C. (later named Ripplewood Investments L.L.C.), bringing Asbury with him. Asbury's CEO Tom Gibson owned a minority interest in the company; leveraged buyout firm Freeman Spogli & Company Inc. also invested in the business in 1997. Asbury sold 12,000 new cars that year.

By February 1998, Asbury had added deals to buy two leading Florida car dealers, Coggin Automotive Group of Jacksonville and Courtesy Automotive Group of Tampa. Arkansas's McLarty Automotive Group (later renamed North Point), North Carolina's Crown Automotive, and Oregon's Thomason Auto Group were also acquired during the year.

Gibson told Automotive News that Asbury was building infrastructures called platform groups as a basis for achieving economies of scale on things such as newspaper advertising in local markets. The shared costs allowed the company to consider acquiring dealers with margins as small as 1 percent, versus the typical 4 percent.

Kendrick Becomes President and CEO in 1999

Brian E. Kendrick was named president and CEO of Asbury Automotive Group in November 1999. He had previously led DFS Group Limited, a luxury goods distributor controlled by LVMH Moët Hennessy Louis Vuitton. He had also been chief operating officer of Sak's Holdings during that company's initial public offering (IPO). Gibson remained on as Asbury's chairman.

Automotive News ranked Asbury the country's second largest dealer chain in 1999. It was the 39th largest private company in the United States. Asbury added four stores in 2000 for a total of 84, reported Automotive News. It sold 154,422 new and used cars in that year for revenues of $4.03 billion, up from $1.08 billion the previous year. Profits of $28 million were more than nine times the $3 million the company netted in 1999.

Corporate Structure Streamlined in 2000

In April 2000, Asbury streamlined its corporate structure from eight individual companies to just one, as the Oregon platform changed its name to Asbury Automotive Group, L.L.C. and became the parent company. A depressed stock market led Asbury to keep its plans for an IPO, always considered an eventual possibility, on hold.

Two dealerships in the Jackson, Mississippi, market, Gray-Daniels Ford and Metro Mazda-Hyundai-Suzuki-Isuzu, were added in the first half of 2001. Asbury created its ninth regional platform to include these with its nearby Mark Escude dealerships, which had previously been part of the Arkansas platform. The Jackson dealers were re-branded under the Gray-Daniels Auto Family name. Tom Wimberley Auto World was added later in the year. Asbury also acquired Kelly Pontiac-GMC of Jacksonville, Florida, in late 2001; it became part of the Coggin Automotive Group.

The threat of car lots losing business to Internet auto retailers was perceived as less of a threat after the collapse of tech stocks. In August 2001, Asbury's leadership felt the time was right to bring their shares to market. It was the first IPO from a brick-and-mortar car dealership since 1998. Company executives described the auto dealer business as resistant to down cycles in the economy, since they also provided auto repairs, parts, and used cars for people concerned with saving money.


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