Asbury Automotive Group Profile
Asbury Automotive Group, Inc. operates as an automotive retailer in the United States. The company’s store operations are conducted by its subsidiaries.
The company offers an extensive range of automotive products and services fulfilling the entire vehicle ownership lifecycle, including new and used vehicles, parts and service, which includes vehicle repair and maintenance services, replacement parts and collision repair services (collectively referred to as parts and services or P&S), and finance and insurance (F&I) products, including arranging vehicle financing through third parties and aftermarket products, such as extended service contracts, guaranteed asset protection (GAP) debt cancellation and prepaid maintenance.
The company’s omni-channel platform is designed to engage with customers where and when they want to interact and to increase its market share through digital innovation. The company focuses on providing a high level of customer service and have designed its dealerships’ services to meet the increasingly sophisticated needs of customers throughout the vehicle ownership lifecycle. The company’s digital capabilities further enhance its physical dealership network and drive additional revenue. The company’s ability to provide a low friction experience across its omni-channel platform drives customer satisfaction and repeat business across its dealership portfolio.
In December 2020, the company introduced Clicklane, the automotive retail industry’s first, end-to-end, 100% online vehicle retail tool. This differentiated platform offers its customers an easy, seamless and transparent approach to completing the purchase or sale of vehicles completely online inclusive of all documentation, loan origination and everything in between.
Business
The company’s new vehicle franchise retail network within its Dealerships segment is made up of dealerships located in 14 states operating primarily under 15 locally branded dealership groups.
Operations
New Vehicle Sales
The company’s new vehicle revenues include new vehicle sales and lease transactions arranged by its dealerships with third-party financial institutions.
Used Vehicle Sales
The company sells used vehicles at all its franchised dealership locations, seven stand-alone used vehicle dealerships, one used vehicle wholesale business and one auto auction. Used vehicle sales include the sale of used vehicles to individual retail customers (used retail) and the sale of used vehicles to other dealers at auction (wholesale) (the terms used retail and wholesale collectively referred to as used).
The company’s new vehicle operations typically provide its used vehicle operations with a large supply of trade-ins and off-lease vehicles. The company also purchases a portion of its used vehicle inventory at open auctions and auctions restricted to new vehicle dealers.
Parts and Service
The company provides vehicle repair and maintenance services, sell replacement parts, and recondition used vehicles at all of its dealerships. In addition, the company provides collision repair services at its 32 free-standing collision repair centers that the company operates either on the premises of, or in close proximity to, its dealerships. Historically, parts and service revenues have been more stable than those from vehicle sales. Industry-wide, parts and service revenues have consistently increased over time primarily due to the increased cost of maintaining vehicles, the added technical complexity of vehicles, and the increasing number of vehicles on the road.
Finance and Insurance
The company offers a wide variety of automotive F&I products to its customers. Through the acquisition of TCA (Total Care Auto, Powered by Landcar) in December 2021, the company offers extended vehicle service contracts, prepaid maintenance contracts, key replacement contracts, guaranteed asset protection contracts, paintless dent repair contracts, appearance protection contracts, tire and wheel, and lease wear and tear contracts. These F&I products are sold to the company’s customers via its network of dealerships.
In addition to the TCA F&I products, the company offers its customers a variety of vehicle protection products through independent third parties in connection with the purchase of vehicles. These products are underwritten and administered by these third parties. Under its arrangements with the providers of these products, the company primarily sells the products on a straight commission basis.
The company also arranges third-party financing for the sale or lease of vehicles to its customers in exchange for compensation paid to it by the third-party financial institution.
F&I revenue in the company’s Dealerships segment represents the commissions earned from both TCA and independent third parties related to a broad range of F&I products. This F&I revenue is presented net of third-party chargebacks.
F&I revenue in the company’s TCA segment represents the premium revenue earned from customers for F&I products primarily sold in connection with the purchase of vehicles at its dealerships. The premium revenue is recognized over the life of the F&I product contract as services are provided.
Strategy
The key elements of the company’s strategy are to provide an exceptional customer experience in its stores; further develop digital and omni-channel capabilities and drive Clicklane penetration across its coast-to-coast footprint; grow F&I product penetration and expand TCA's service offerings across the full dealership portfolio; evaluate opportunities to refine the dealership portfolio; execute its five-year strategic plan to target an increase in its annual revenue to $32 billion by 2025; and attract, retain and invest in top talent to drive growth and optimize operations.
Divestitures
During the year ended December 31, 2022, the company sold one franchise (one dealership location) in St. Louis, Missouri, three franchises (three dealership locations) and one collision center in Denver, Colorado, two franchises (two dealership locations) in Spokane, Washington, one franchise (one dealership location) in Albuquerque, New Mexico and 11 franchises (nine dealership locations) and two collision centers in North Carolina.
Seasonality
Demand for new vehicles is generally highest during the second, third, and fourth quarters of each year, and accordingly, the company expects its revenues and operating results to generally be higher during these periods. In addition, the company typically experiences higher sales of luxury vehicles, which have higher average selling prices and gross profit per vehicle retailed in the fourth quarter (year ended December 31, 2022).
Regulations
The company’s operations are subject to the National Traffic and Motor Vehicle Safety Act, Federal Motor Vehicle Safety Standards and other product standards promulgated by the United States Department of Transportation, and the rules and regulations of various state motor vehicle regulatory agencies.
The company is subject to the Clean Water Act, analogous state statutes, and their implementing regulations, which among other things, prohibit discharges of pollutants into regulated waters without permits, require containment of potential discharges of oil or hazardous substances, and require preparation of spill contingency plans.
History
Asbury Automotive Group, Inc. was founded in 1996. The company, a Delaware corporation, was incorporated in 2002.
