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Group 1 Automotive is only one in a group of firms (AutoNation and Penske Automotive Group are the largest) striving to consolidate US auto sales. The company owns and operates about 160 franchises at more than 120 dealerships, as well as about 30 collision service centers in about 15 US states. More than half of Group 1's dealerships are located in – more... Texas, Oklahoma, and California. Group 1 Automotive also has about five dealerships and several collision centers in the UK. The company's dealerships offer new (about 55% of sales) and used cars and light trucks under some 30 different brands. It also offers financing, provides maintenance and repair services, and sells replacement parts. 

Operations

Group 1 Automotive's operations include four core business segments: New Vehicles (more than 50% of sales); Used Vehicles (28%); Parts & Service (13%); and Finance & Insurance. In the UK the auto dealer operates through its subsidiary Group 1 Automotive UK Ltd.

Geographic Reach

The auto dealer rings up 95% of its sales in the US; the remainder comes from the UK. In Britain it has locations in Brighton, Farnborough, Hailsham, Hindhead, and Worthington.

Financial Analysis

While Group 1's 2011 sales increased more than 10% vs. 2010 to top $6 billion, they have not quite returned to prerecession levels (more than $6.2 billion in 2007). Still, the company had a strong year, with net income up nearly 64% vs. 2010 and cash flow from operations rose sharply (after taking a dive in 2010). Since 2008 the company and its rivals have suffered from declining consumer confidence, high unemployment and tight credit availability, which conspired to drive down demand for new and used vehicles. However, the sales and profit picture brightened beginning in late 2010, and 2011 was a strong year for both new and used vehicle sales. Sales of new and used automobiles rose 4.6% and nearly 7%, respectively.

Strategy

Like its rival AutoNation, Group 1 Automotive is focusing on acquiring import and luxury brand dealerships. In 2013 it bought Shawnee Mission Kia located in Overland Park, Kansas, to complement its existing BMW, MINI, and Hyundai dealerships in the Kansas City metro area. In 2012 it acquired a Honda franchise and a Volkswagen franchise in Panama City, Florida, expanding its presence in Florida Panhandle. In 2011 it completed 14 franchise acquisitions including a Volkswagen dealership in Irving, Texas, adding to its four existing dealerships in the Dallas metropolitan area. Further adding to its Texas holdings, in June it purchased a pair of dealerships (Ford and GM) in El Paso. In 2012 the company's strategy includes growing its higher margin parts and services business, growing its share of the new and used vehicle market, taking advantage of its size to boost efficiency, and continuing to make strategic acquisitions. In recent years Group 1 has seen import and luxury brands account for an increased share of its business. Indeed, in 2011 they accounted for about 80% of its sales mix, with domestic brands contributing 19%. That's quite a switch from 2005, when domestic brands totaled about 36% of sales.

The US auto dealer is also expanding internationally. In 2013 it agreed to acquire one of Brazil's largest automotive retailers, UAB Motors Participacoes S.A., for about $47.4 million cash, 1.45 million shares of Group 1 common stock, and the assumption of some $62 million in debt. UAB owns 18 dealerships with an estimated $650 million in annual revenue. – less

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