The 40 largest auto dealers in Orange County combined for $5.3 billion in sales for the 12-month period that ended June 30, a 1.5% increase that marks a significant slowdown from recent years, according to this week’s Business Journal list.
The top dealers here combined for a 5.9% jump in sales over the same period last year, and had notched similar annual gains since the recession.
The slower gains in local sales are generally in line with the national pace: auto dealers throughout the U.S. collectively sold 17.4 million vehicles last year, a 5.7% increase compared to 2014, but dropped to a 1.5% growth pace during the first six months of this year, according to New Jersey-based market researcher Autodata Corp.
The county has 123 franchised auto dealers, and they together generated $12 billion in sales last year, employing 12,300 with a total payroll of more than $676 million, according to the Orange County Automobile Dealers Association in Newport Beach.
The 40 largest dealers, that make up the Business Journal’s list combined for sales of 93,542 new vehicles and 37,198 used models in the 12 months through June, a 0.9% uptick on a unit basis.
Twenty dealerships reported increases in revenue, and 11 showed declines. Figures for the remaining nine are Business Journal estimates.
• Fletcher Jones Motorcars in Newport Beach, ranked No. 1, reported $656.5 million in sales, a 1.8% dip year-over-year. The dealership sold 6,724 new cars and 2,528 used ones, and it employed 296 sales and service personnel.
• Sales at No. 2 Crevier BMW, which Michigan-based Penske Automotive Group bought in 2011, were about flat at $346.2 million. The dealership, which placed No. 2 on the list, sold 3,584 new cars, a 7.8% dip. Its used cars division fared better, selling 2,162, a 21.6% uptick. It employed 161 workers.
• No. 3, Toyota of Orange, which is part of Wilson Automotive Group, posted a 10.6% increase in sales to $314.8 million. It sold more new vehicles than any other dealer on the list—8,829—while its used vehicles sales added up to 1,700. The dealership employed 140 service and sales personnel.
• AutoNation Infiniti Tustin, owned by Fort Lauderdale, Fla.-based chain AutoNation Inc., posted the biggest percentage gain in the group, with a 39.4% uptick for $67 million in sales, placing at No. 32. Its new-car sales were up 66.5% to 984, and used cars were up 1% to 527. It employed 43.
AutoNation Inc. plans to build a Porsche dealership on a vacant lot along the Santa Ana (I-5) Freeway near Scientific Way in Irvine, according to permits filed with the city. It bought an “open point” that gives it exclusive rights to sell the brand in a specific geographic area—typically a 10-mile radius.
Several local dealerships changed hands over the past year or so, with new owners looking for economies of scale.
“Especially in California, where the cost of doing business is so significant, dealers are finding it much more effective to be larger in size, in organization—because they gain tremendous scale in terms of their legal costs, their HR, advertising, and particularly their technology expenses,” said Erin Kerrigan, founder of Irvine-based Kerrigan Advisors. Kerrigan has worked on the sales of about 30 dealerships in the past couple of years, including Irvine-based Fladeboe Automotive Group’s sale of its three dealerships to Newport Beach-based Conant Auto Retail Group in 2014.
More recent deals include:
• Jim Graham, owner of Santa Margarita Ford, acquired Santa Margarita Toyota from John Dinsmore in April. The Toyota dealership which employs about 100, had $41 million in sales last year but did not submit figures for this year’s list.
• Phillips Mazda, now known as Capistrano Mazda, in January moved from its longtime home in Laguna Hills down the freeway to San Juan Capistrano, where Miles Brandon has been selling Volkswagens for nearly two decades. Former owner Eric Phillips, meanwhile, is working with Riverside-based Van Daele Development Corp. to turn the former dealership site—about 5 acres—into a 54-townhome community bordered by a small retail center.
• Shelly Automotive Group—owner of Irvine BMW, which placed No. 5 on the list—last month added Jaguar of San Diego and Lexus of Riverside to its portfolio of luxury brands.
“Including real estate, the average Orange County dealership transaction can be well north of $20 million in value,” for one franchise Kerrigan said, adding that she thinks that despite a slowdown in sales pace, the local market will continue to consolidate due to a “generational shift that continues where dealers are deciding it’s either time for retirement or families are saying it’s time for us to sell this huge entity,” and because dealership “valuations are still very strong,” with “tremendous amount of capital coming into auto retail.”
The six automakers with U.S. operations based in Orange County combined to employ 2,222 local workers as of October, up 20% over the year-earlier period.
The companies accounted for 1.88 million vehicles sold during the period, up 8.2%.
• Costa Mesa-based Karma Automotive LLC ramped up its operations amid the September launch of the $130,000 sports car Revero, a hybrid model powered by electricity, gas and solar energy. Karma, No. 1 on the list, increased its headcount in OC by 292.3% to 510.
The Revero is made at its 556,000-square-foot facility in Moreno Valley, where the workforce brings its total employee count to about 700.
The automaker plans to increase its OC staff by another 300 as part of a pending move to new headquarters in Irvine. Its distribution strategy for the Revero will include 10 independent dealers in the U.S. and Canada, and a company-owned brand-experience at the new office in Irvine.
• Fountain Valley-based Hyundai Motor America Inc., the largest automaker with operations here, sold 764,621 vehicles through more than 830 dealerships. The subsidiary of South Korea-based Hyundai Motor Corp. has 500 local workers, good for the No. 2 spot on the list.
• Mazda North American Operations, ranked No. 3, decreased its headcount by 5.4% to 491 as it prepares to move to new headquarters just down the street to the new 200 Spectrum office. It sold 305,542 vehicles, about the same as the year-ago period.
• Kia Motors America Inc. in Irvine, part of Hyundai Motor Group, employs 326, an uptick of 7.9%. It sold 697,300 vehicles, up 17.4%.
• Cypress-based Mitsubishi Motors North America Inc. increased its staff by 3% to 240. It sold 95,342 vehicles during the period, up 8.9%.
• Isuzu Commercial Truck of America Inc. reduced its ranks by 16.2% to 155. It sold 23,000 vehicles during the period, a 7% increase.
Expect to find the recently established Genesis Motors USA in Fountain Valley on next year’s list. The automotive brand, a Hyundai Motor America spinoff, was formalized in March. The vehicles are distributed through a subset of about 350 Hyundai dealers. Genesis sold 1,497 vehicles in August—its first month on the market—1,211 in September and 1,201 in October, bringing its 2016 total to 3,909.
OC also is home to Aston Martin Americas, which employs 21 workers in Irvine. The luxury automaker sells about 4,000 cars a year at $115,000 to $337,000 each. Newport Beach Aston Martin, the only Aston Martin dealership in Orange County, “sold over 50 Aston Martins last year.”