Asbury Automotive Group, Inc. operates as a franchised automotive retailer in the United States.
As of December 31, 2024, the company owned and operated 198 new vehicle franchises, representing 31 brands of automobiles at 152 dealership locations, 37 collision centers, and Total Care Auto, Powered by Landcar (‘TCA’ or ‘TCA Business’), its finance and insurance (‘F&I’) product provider, within 14 states. The company’s store operations are conducted by its subsidiaries and the company operates in...
Asbury Automotive Group, Inc. operates as a franchised automotive retailer in the United States.
As of December 31, 2024, the company owned and operated 198 new vehicle franchises, representing 31 brands of automobiles at 152 dealership locations, 37 collision centers, and Total Care Auto, Powered by Landcar (‘TCA’ or ‘TCA Business’), its finance and insurance (‘F&I’) product provider, within 14 states. The company’s store operations are conducted by its subsidiaries and the company operates in two reportable segments, the Dealerships and TCA segments.
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 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 strives for a diversified mix of products, services, brands and geographic locations which allows it to reduce the company’s reliance on any one manufacturer, minimize the impact from changes in customer preference and maintain profitability across fluctuations in new vehicle sales.
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 is focused 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 the company’s dealership portfolio.
Divestitures
During the year ended December 31, 2024, the company sold 1 Lexus franchise (1 dealership location) in Wilmington, Delaware
Four Key Components of the company’s 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 16 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. Used vehicle sales include the sale of used vehicles to individual retail customers (‘used retail’) and the sale of used vehicles to other dealers or licensed wholesalers (‘wholesale’) (the terms ‘used retail’ and ‘wholesale’ collectively referred to as ‘used’).
The company’s new vehicle operations typically provide it used vehicle operations with a large supply of trade-ins and off-lease vehicles, which the company believes are good sources of high-quality used vehicles. The company also purchases a portion of its used vehicle inventory at ‘open’ auctions and auctions restricted to new vehicle dealers. Additionally, the company used vehicle sales benefit from its ability to sell certified pre-owned vehicles from the company’s franchised dealerships.
Parts and Service
The company provides vehicle repair and maintenance services, sell replacement parts, and recondition used vehicles at all its dealerships. In addition, the company provides collision repair services at its 37 free-standing collision repair centers that the company operates either on the premises of, or near, its dealerships.
To maintain the necessary knowledge to service vehicles and further develop the company’s technician staff, its focus on the company’s internal and manufacturer specific training and development programs for new and existing technicians. The company’s parts and service business is also well-positioned to benefit from the service work potentially generated through the sale of extended service contracts to customers who purchase new and used vehicles from it, as historically these customers tend to have their vehicles serviced at the location where they purchased the extended service contract. In addition, the company’s franchised dealerships benefit from manufacturer policies requiring that warranty and recall related repairs be performed at a franchised dealership. The company’s collision repair centers provides the company with an attractive opportunity to grow its business due to the high margins provided by collision repair services and the fact that the company is able to source original equipment manufacturer parts from its franchised dealerships.
Finance and Insurance
The company offers a wide variety of automotive F&I products to its customers. Through the acquisition of TCA 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 the company’s arrangements with the providers of these products, it 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 the company by the third-party financial institution. The company does not directly finance its customers' vehicle purchases or leases, therefore the company’s exposure to losses in connection with those third-party financing arrangements is limited generally to the compensation it receives. The compensation the company receives is subject to chargeback, or repayment, to the third-party finance company if a customer defaults or prepays the retail installment contract typically during some limited time period at the beginning of the contract term. The company has negotiated agreements with certain lenders pursuant to which it receives additional compensation upon reaching a certain volume of business.
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.
The Dealerships segment also provides vehicle repair and maintenance services to TCA customers in connection with claims related to TCA's products.
In addition, F&I revenue includes investment income and other gains and losses related to the performance of the company’s investment portfolio.
Business Strategy
The company’s strategies are to provide an exceptional customer experience in the company’s stores; accelerate same store growth and guest experience through technology investment; grow F&I product penetration and expand TCA's service offerings across the full dealership portfolio; and evaluate opportunities to refine the dealership portfolio.
Seasonality
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 2024).
Dealer and Framework Agreements
Each of the company’s dealerships operate pursuant to a dealer agreement between the dealership and the manufacturer (or in some cases the distributor) of each brand of new vehicles sold and/or serviced at the dealership. The dealer agreements grant the franchised dealership a non-exclusive right to sell the manufacturer's (or distributor's) brand of vehicles and offer related parts and service within a specified market area.
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 Departments of Insurance of U.S. states have regulatory authority over the company’s TCA business.
The company’s TCA business involves the offer and sale of extended vehicle service contracts, debt protection products, vehicle protection plans and other miscellaneous vehicle protection products, which are subject to a wide range of federal, state and local laws and regulations. The Departments of Insurance of U.S. states have regulatory authority over the company’s TCA business. The company’s TCA business is subject to state licensing and registration requirements, and financial responsibility and security requirements.
The company is also 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.