Ohio automobile dealers: economic impact
Number of new vehicle dealerships: 830
New vehicles sold: 566,039
Total retail sales: $34.4 billion
New car sales: $16.4 billion
Sales tax dollars: $1.27 billion
New vehicle dealership employees: 50,444
Annual payroll: $2.22 billion
Source: Ohio Automobile Dealers Association
The Jeff Schmitt Auto Group acquisition of Langs Chevrolet in Beavercreek Twp. on Wednesday reflects a trend toward auto dealership consolidation that has been felt both nationally and locally.
Five area dealerships in the past year have been bought by other companies, coinciding with the booming auto industry that is breaking sales records in 2015.
Such acquisitions “make good economic sense in terms of economies of scale,” Tim Doran, president of the Ohio Automobile Dealers Association, said Wednesday. Doran said he expects the shift to continue.
Owners of a single dealership or a small number of dealerships face higher costs for computer systems and other support systems on a per-car-sold basis than larger dealership groups, making it more difficult to compete, Doran said.
In the mid-1970s — when Ohio law prohibited a dealership owner from buying other manufacturers’ dealerships in the same market — there were 1,960 dealerships, each with its own principal owner, in the state. That law was changed in 1979, and today, there are about 830 dealerships in the state. Those dealers have been able to pass along some of the cost savings from their larger-scale operations to consumers.
Other factors are accelerating the trend toward consolidation. In March, Warren Buffett’s Berkshire Hathaway Inc. investment company purchased Van Tuyl Group of Phoenix, the nation’s fifth-biggest dealership group and the largest privately held one, with 78 dealerships. That purchase is seen as a stamp of approval that will speed the pace of dealership consolidation, according to Automotive News.
Closer to home, the father-son duo of Dave and Joe Hidy sold the family’s four Dayton-area car holdings —the flagship Honda dealership along with Ford, Hyundai and Acura dealerships — and exited the business late last year. The Honda and Ford holdings went to Columbus-based Germain Motor Co., which operates nine dealerships in the Columbus area, as well as four in Michigan and three in Florida. Superior Auto Cincinnati, which operates Hyundai, Acura, Kia and Honda dealerships in the Cincinnati area, purchased Hidy’s Dayton-area Hyundai and Acura dealerships.
Langs Chevrolet, like Hidy, got its start in downtown Xenia, although about five decades earlier, in 1926. It too moved to Orchard Lane off U.S. 35 between Xenia and Dayton in the late 1980s.
With the acquisition of Langs, Jeff Schmitt Auto Group now owns three Dayton-area Chevrolet dealerships, which Schmitt said gives it the largest Chevrolet inventory in Dayton, and one of the largest in Ohio. The Schmitt auto group also owns Cadillac, Mazda, Mitsubishi and Nissan dealerships in the Dayton area.
Other dealership transactions in recent months have included Reichard Buick GMC on Salem Avenue in Dayton buying the former Boose Chevrolet in Brookville, and Steve VanGorder, owner of SVG Motors, purchasing the former Ron Garrett Chevrolet in Greenville. Rodney Cobb Chevrolet Buick GMC in Eaton was sold to Ed Larkin, owner of Rose Automotive, formerly Rose Chevrolet, in Hamilton.
Why the flurry of activity now? For one reason, business is booming.
New-car sales have increased steadily each year since bottoming out in 2009 with 10.4 million units sold, and are projected to reach 17.3 million this year, signaling a full recovery from the Great Recession.
“This is going to be the best year for the auto industry since 2001, and obviously that has a big impact on an area like Dayton,” Gus Faucher, a PNC Bank senior economist and vice president, told Dayton-area business leaders Tuesday at a PNC economic forecast event in Moraine.
The strong sales rebound has boosted the value — and potential asking price — of dealerships themselves. In addition, smaller dealerships that have been owned by the same family for generations go up for sale because of family-succession complications. “Nothing lasts forever,” the Ohio Automobile Dealers Association’s Doran said.
Still, with about 18,000 or so dealerships in the United States, the current trend “doesn’t mean that everything is going to be consolidated quickly,” Doran said. “We’ll still see some independents and family-owned dealerships for a long time.”
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