By Alysha Webb, Editor and Publisher
Carter Myers Automotive Group, a family-owned dealership group in Charlottesville, Virginia, recently acquired Nissan and Subaru dealerships in Staunton, Virginia, but it isn’t on an acquisition spree, said H. Carter Myers III, the Group’s executive chairman.
He recently spoke with Automotive Buy Sell Report about CMA’s approach to expansion, including the importance of his daughter coming back into the family business.
H. Carter Myers III
“We aren’t trying to buy up everything around,” said Myers. “We have a careful growth strategy.”
Location is central to that strategy. The Group only buys dealerships that are within an hour or two of its headquarters in Charleston. They don’t want to drive hours to get to a store, said Myers. The Nissan and Subaru stores were literally across the street from Honda and Volkswagen stores already owned by Carter Myers Automotive, or CMA.
Familiarity with a store and its operator is also important in an acquisition, said Myers. Indeed, personal relationships figure largely in CMA’s growth strategy. The Myers had known Ed Lewis, the previous owner of the Staunton stores, for years, said Myers. “Almost all the deals we have put together have been through personal contacts,” he said.
In such a world earning a reputation as being a good company with which to do business is also key. CMA tries to make sure deals are done as smoothly as possible. “We have always ended up on really good terms [with the previous owners],” said Myers.
That encourages people to sell their dealerships to CMA when they do want to sell. And the Group makes sure owners of dealerships it might want to acquire know of its interest.
It can pay off though the sale might not occur for years. That was the case with the Volkswagen store CMA acquired a few years ago. The Group had let the owner know it was interested; when his son died the dealer called CMA about acquiring the store.
Daughter’s return spurs growth
When a dealership — or dealerships – is family-owned succession is always a key issue. In Myers’ case, that issue was resolved when his daughter, Liza Myers Borches, came back to work for in the family business in 2003 after working with American Honda. The fourth generation to head the Group, Borches is now president and CEO of Carter Myers Automotive.
That was a turning point in the Group’s decision to grow, said Myers, who is now in his 70’s. Before his daughter decided to work in the family business he wasn’t considering expanding the Group’s footprint, said Myers. Her return “was a big thing in my life [and] in the company life,” he said.
The Group has expanded from three to 11 stores since 2003.
Carter Myers Automotive includes 13 franchises among those 11 stores. Despite its location in the Deep South, where you might imagine domestic brands would be preferred, the Group likes import brands, said Myers.
Honda is a favorite brand, and the Subaru store it just acquired was a franchise CMA was “particularly looking for,” said Myers. “Subaru is a good brand in our mountainous area and we didn’t have it.”
He also likes Volkswagen even though the brand has recently seen sales slow in the U.S. “We are not discouraged,” said Myers.
Among the domestics, Myers isn’t too keen on General Motors despite the fact that the Group owns Cadillac, Chevrolet, Buick, and GMC franchises. Profits are good at the Chevrolet store, said Myers, but he is taking a wait-and-see approach for now to acquiring any more GM stores.
CMA has a Lincoln dealership and Myers would like to see a bit more action from Ford Motor Company on the luxury Lincoln brand. “If they really get behind the Lincoln brand, that would be good,” he said.
The Ford brand is the domestic that Myers really likes. “I like the management team; I know Ford people better that I know the GM folks,” he said. CMA would be interested in acquiring a Ford store “in the right situation, in the right market.”
The right market is within a few hour’s drive of Charlottesville. The right situation would be after the Group has had time to digest the two stores it just bought, said Myers. “We don’t have a big corporate staff; we can’t do five acquisitions a year,” he said.
As for pricing, in his part of the country non-luxury import dealerships are priced at multiples of about four times earnings, said Myers. He thinks that is a good guideline. “I hear some crazy numbers on some stores,” said Myers, mentioning BMW, Mercedes, and Lexus as some examples of dealerships with those crazy high prices.
Charles Myers Automotive generally buys dealerships that aren’t operating at the top of their game, said Myers. Often that is because the owners aren’t very excited about the business anymore and are ready to sell, he said. “Their earnings haven’t been what we could make running the store,” said Myers.
While CMA will buy a store whose business isn’t “running like a top,” as Myers put it, the Group doesn’t like stores in a bad location or whose real estate needs a lot of improvement. “In real estate, you shouldn’t pay someone else for what you can do with the property,” he said.
It’s hard being small
Myers sees size as fairly essential in today’s dealership environment. Times are tough for single or double-point dealers, said Myers. The banks and vendors aren’t as willing to work with small operations and the costs of carrying the necessary HR and compliance staff can be onerous for a small operation, he said.
Still, Myers doesn’t see the publically-owned groups taking over the dealership business. He figures others will also continue to play a significant role in the buy sell world.
“What you have is a lot of well-capitalized dealers [and] they like the return on investment they get in their business. They don’t see where they can get a better return [than in dealerships].”
H. Carter Myers III is Executive chairman of Carter Myers Automotive Group. He can be emailed at cmyers@cmacars.com.
