Automobile

Mich. Suburban Collection stores to close ahead of expected Lithia purchase

Lithia Motors Inc. is about to take control of southeast Michigan’s Suburban Collection, in a move that will mark one of the largest dealership buy-sell transactions in the past decade while cementing the Oregon group’s reach in the Midwest.

Suburban Collection dealerships in Michigan are slated to close Saturday, April 10, through 1 p.m. April 12 for “necessary system updates,” according to a message on the group’s website.

A source told Automotive News on Friday that inventory will be assessed over the weekend and the stores will reopen Monday under Lithia ownership.

Suburban CEO David Fischer Jr. declined to comment on Friday, as did a spokeswoman for Lithia.

Lithia’s planned acquisition of Michigan’s Suburban Collection, one of the nation’s largest privately held dealership groups, was reported by Automotive News in January.

Adding the Suburban Collection will bring the nation’s third-largest new-vehicle retailer closer to its goal of achieving $50 billion in revenue by 2025, with acquisitions a major driver of that growth.

Since announcing its five-year plan in July, Lithia, of Medford, Ore., has purchased dealerships representing more than $4 billion in annualized revenue. The retailer expects to close on dealerships generating $7 billion in annualized revenue this year and has already purchased seven dealerships in Florida and one in Arizona.

The Suburban Collection acquisition will be Lithia’s largest at least since the 2014 purchase of DCH Auto Group Inc., which included 27 stores and nearly $2.3 billion in annualized revenue.

Suburban Collection of Troy, Mich., ranked 21st in the nation for new-vehicle sales in 2020, according to the Automotive News Research & Data Center. It represents dozens of brands at 43 locations in the U.S. as of year-end 2020. The group pulled in $2.4 billion in revenue last year, when it sold 29,314 new vehicles.

The sale marks a diversion from Lithia’s long-standing acquisition strategy of purchasing underperforming stores in out-of-the-way markets. Growing at the pace required to meet its lofty revenue goals means Lithia needs to purchase profitable stores at higher price points. Much like the DCH acquisition of 27 dealerships in California, New Jersey and New York, the Suburban deal secures a strong foothold in a major metropolitan and suburban market.

David Phillips contributed to this report.

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