Lithia plans buying spree to become $50 billion retailer by 2025

It’s early in the trip, but so far DeBoer is running ahead of schedule.

The plan calls for acquiring dealerships that generate $3 billion to $5 billion in annual revenue each year, and in the 10 months since it was announced, Lithia has added $6.7 billion in revenue.

The biggest piece was Suburban Collection in Michigan. The purchase is one of the largest in auto retail history, adding 34 new-car dealerships, 56 franchises and $2.4 billion in revenue to the public retailer. The deal allowed Lithia to jump ahead of Penske Automotive Group to become the second-largest U.S. dealership group by new-vehicle retail sales and No. 1 in terms of dealership count, with 247 new-car stores, surpassing AutoNation.

Staying on to manage the stores — and Lithia’s North Central region, which includes most of the Midwest — is David Fischer Jr., Suburban’s CEO. He joins a group of vice presidents who have operational jurisdiction over their dealership groups within Lithia’s ownership structure.

The autonomy of his position reflects the public company’s larger strategy of decentralized management — which allows the employees closest to their customers to handle operations.

The company rolled out Lithia Partners Group in 2015 to provide autonomy, improve store performance and retain top talent. Today, about one-third of the 250 Lithia store runners are involved.

A huge benefit of Lithia Partners Group involves the freedom given to general managers to seek out potential Lithia acquisitions on their own, in their backyards. DeBoer calls this giving those who make the money the power to spend it.

“Those partners get about twice the amount of stock, and they have full autonomy,” DeBoer said. “They can use capital to grow and get a second store or third store or fourth store. The rest of the 150 stores are all aspiring to become that.”

Store performance scorecards allow Lithia to keep a close eye on operations without stepping foot in most of the dealerships.

Stores are measured by consumer loyalty, market share, profitability vs. potential, development of leaders and support on network development. As long as those numbers are where they should be, the executive team can focus on growth.

“We just want to make sure that you grow your market share, you grow the loyalty of your customers, and ultimately, that yields profitability,” DeBoer said. “We’re not as caught up in how you do it.”

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