netrashetty
Netra Shetty
Lithia Motors, Inc. (NASDAQ: LAD) sells 30 brands of new vehicles, through 108 stores and 187 franchises located in the western part of the U.S. In addition, the company uses a wholesale channel to liquidate less desirable used vehicles, usually acquired as trade-ins, rather than include them in inventory. Approximately 75% of the company's stores are located in cities that do not compete directly with any other franchise dealers selling the same brand, with 85% of dealerships located in smaller markets. Lithia Motors operates through five segments: New Vehicles (58% of revenue), Used Vehicles (27%) Service, Body and Parts (11%) and Finance and Insurance including Fleet and others (4%). Daimler Chrysler is 41% of new vehicle sales, GM is 19% and Toyota is 11%.
Business Overview
Lithia Motors, Inc. is an operator of automotive franchises and retailer of new and used vehicles and services. As of April 10, 2008, Lithia offered 30 brands of new vehicles and used vehicles in 109 stores in the United States and over the Internet.[1] The company sells new and used cars and light trucks; sells replacement parts; provides vehicle maintenance, warranty, paint and repair services; and arranges related financing, service contracts, protection products and credit insurance for its automotive customers.
Contents
1 Business Overview
2 Franchise Locations
3 The Industry
4 Financials
5 References
Lithia Motors was founded in 1946 and incorporated in 1968. It's two senior executives have managed the company for nearly 40 years. Since the initial public offering in 1996, Lithia has grown from 5 to 109 stores as of April 10, 2008, primarily through its acquisition program that has been accretive to earnings, increasing annual revenues from $143 million in 1996 to $3.2 billion in 2007. In addition, since initial public offering through December 31, 2007, Lithia has achieved compound annual growth rates of 33% per year for revenues and 23% per year for net income from continuing operations.
The company's current new vehicle revenue mix is weighted towards domestic brands at approximately 62%. Management's strategy is to target a more balanced mix between its domestic, import and luxury brands in the years ahead. Approximately 98% of acquisition revenues in 2007 were from import and luxury brands, contributing to an improvement in its import/domestic mix.
Lithia Motors currently offers several customer guarantees that management believes differentiates the company from other competitors in the marketplace. These guarantees are a culmination of several evolution cycles within Lithia that came to fruition in 2007.
For New Vehicles:
A low haggle “Drive it Now” price, always at or below Manufacturer’s Suggested Retail Price (MSRP);
Never any Additional Dealer Markup;
No Documentation Fees, except where state-mandated or controlled; and
For Used Vehicles
A low haggle “Drive it Now” price;
No Documentation Fees, except where state-mandated or controlled; and
A sixty-day, 3000 mile, “if it breaks, we fix it” warranty.
For Service Work
Service provided on your schedule with no appointment necessary;
A three-year, 50,000 mile warranty on all repair work, including parts and labor, to ensure a customer will never pay for the same repair twice; and
A guaranteed price based on the estimate given at the time the car was dropped off.
In 2007 Lithia opened three stand alone used car stores, called L2 Auto. L2 Auto is a web-based sales process that provides a new experience for consumers in the used car market. It offers transparency in every transaction including availability of a broad selection of popular late model used vehicles, clearly marked “negotiation-free” prices based on current market values, a 240 point inspection plan, a sixty-day, 3000 mile “if it breaks, we fix it” warranty, and a three day “no questions asked” return policy.
Franchise Locations
Franchise Name: Dealer: Street Address: City: State: Zip: Phone: Website:
BMW of Anchorage BMW 730 E. 5th Ave. Anchorage Alaska 99501 866-613-1939 http://www.bmwofanchorage.com/
Chevrolet Cadillac of Fairbanks Chevrolet 3300 S. Cushman St. Fairbanks Alaska 99701 866-648-7507 http://www.fairbankschevy.com/
Chevrolet of South Anchorage Chevrolet 9100 Old Seward Hwy Anchorage Alaska 99515 866-612-5667 http://www.anchoragechevrolet.com/
Chevrolet of Wasilla Chevrolet 3700 E Parks Hwy. Wasilla Alaska 99654 866-681-7841 http://www.wasillachevrolet.com/
Lithia Chrysler Jeep Dodge of South Anchorage Chrysler 9600 Old Seward Hwy. Anchorage Alaska 99515 866-648-7922 http://www.lithiachrysleranchorage.com/
Lithia Hyundai of Anchorage Hyundai 5400 Old Seward Hwy. Anchorage Alaska 99518 866-579-4144 http://www.lithiahyundaianchorage.com/
Saab of South Anchorage Saab 9100 Old Seward Hwy. Anchorage Alaska 99515 866-599-2349 http://www.anchoragesaab.com/
BMW of Monterey BMW 1 Geary Plaza. Seaside California 93955 866-681-6838 http://www.bmwmonterey.com/
Lithia Chevrolet of Redding Chevrolet 200 East Cypress Ave. Redding California 96002 866-681-7574 http://www.lithiachevroletredding.com/
Lithia Chrysler Jeep Dodge of Eureka Chrysler 4320 Broadway Eureka California 95503 866-681-8688 http://www.lithiaeureka.com/
Lithia Dodge of Fresno Dodge 6162 N Blackstone Ave Fresno California 93710 866-681-7818 http://www.lithiafresnododge.com/
Lithia Chrysler Jeep Dodge of Santa Rosa Chrysler 730 E 5th Ave Anchorage California 99501 866-613-1939 http://www.lithiadodgesantarosa.com/
Lithia Chrysler Jeep Dodge of Concord Chrysler 730 E 5th Ave Anchorage California 99501 866-613-1939 http://www.lithiadodgeconcord.com/
Lithia Ford of Fresno Ford 730 E 5th Ave Anchorage California 99501 866-613-1939 http://www.lithiafordoffresno.com/
Lithia Hyundai of Fresno Hyundai 730 E 5th Ave Anchorage California 99501 866-613-1939 http://www.lithiahyundaifresno.com/
Lithia Mazda of Fresno Mazda 730 E 5th Ave Anchorage California 99501 866-613-1939 http://www.fresnomazda.com/
Lithia Nissan of Fresno Nissan 730 E 5th Ave Anchorage California 99501 866-613-1939 http://www.lithianissanfresno.com/
Porsche of Monterey Porsche 730 E 5th Ave Anchorage California 99501 866-613-1939 http://monterey.porschedealer.com/service/index.php
Lithia Scion of Vacaville Scion 730 E 5th Ave Anchorage California 99501 866-613-1939 http://www.lithiascionofvacaville.com/
Lithia Scion of Redding Scion 730 E 5th Ave Anchorage California 99501 866-613-1939 http://www.reddingscion.com/
Lithia Suzuki of Fresno Suzuki 730 E 5th Ave Anchorage California 99501 866-613-1939 http://www.lithiasuzukioffresno.com/
Lithia Toyota of Redding Toyota 730 E 5th Ave Anchorage California 99501 866-613-1939 http://www.lithiatoyotaredding.com/
Lithia Volkswagen of Thornton Volkswagen 730 E 5th Ave Anchorage Colorado 99501 866-613-1939 http://www.lithiavwthornton.com/
Chevrolet Cadillac of Twin Falls Chevrolet 730 E 5th Ave Anchorage Idaho 99501 866-613-1939 http://www.twinfallschevrolet.com/
Chevrolet of Caldwell Chevrolet 730 E 5th Ave Anchorage Idaho 99501 866-613-1939 http://www.caldwellchevrolet.com/
Lithia Chrysler Jeep Dodge of Pocatello Chrysler 730 E 5th Ave Anchorage Idaho 99501 866-613-1939 http://www.lithiachryslerpocatello.com/
Lithia Chrysler Jeep Dodge of Twin Falls Chrysler 730 E 5th Ave Anchorage Idaho 99501 866-613-1939 http://www.twinfallsdodge.com
Lithia Ford Lincoln Mercury of Boise Ford 730 E 5th Ave Anchorage Idaho 99501 866-613-1939 http://www.lithiafordboise.com/
Audi Boise Audi 730 E 5th Ave Anchorage Idaho 99501 866-613-1939 http://www.audiofboise.com/
Honda of Pocatello Honda 730 E 5th Ave Anchorage Idaho 99501 866-613-1939 http://www.hondaofpocatello.com/
Lithia Hyundai of Pocatello Hyundai 730 E 5th Ave Anchorage Idaho 99501 866-613-1939 http://www.lithiahyundaipocatello.com/
L2 Auto of Boise Chrysler 730 E 5th Ave Anchorage Idaho 99501 866-613-1939 http://www.l2autoofboise.com/
Acura of Johnston Acura 730 E 5th Ave Anchorage Iowa 99501 866-613-1939 http://www.acuraofjohnston.com/
Audi Des Moines Audi 730 E 5th Ave Anchorage Iowa 99501 866-613-1939 http://www.audiofdesmoines.com/
BMW of Des Moines BMW 730 E 5th Ave Anchorage Iowa 99501 866-613-1939 http://www.bmwdesmoinesiowa.com/
Honda of Ames Honda 730 E 5th Ave Anchorage Iowa 99501 866-613-1939 http://www.ameshonda.com/
Kia of Cedar Rapids Kia 730 E 5th Ave Anchorage Iowa 99501 866-613-1939 http://www.kiaofcedarrapids.com/
Mercedes-Benz of Des Moines Mercedes-Benz 730 E 5th Ave Anchorage Iowa 99501 866-613-1939 http://www.mbzofdesmoines.com/
Lithia Nissan of Ames Nissan 730 E 5th Ave Anchorage Iowa 99501 866-613-1939 http://www.amesnissan.com/
Assured Used Car and Truck Misc. 730 E 5th Ave Anchorage Iowa 99501 866-613-1939 http://www.assuredusedcarandtruckstore.com/
Lithia Volkswagen of Des Moines Volkswagen 730 E 5th Ave Anchorage Iowa 99501 866-613-1939 http://www.lithiavwofdesmoines.com/
Buick GMC Cadillac of Cedar Rapids GM 730 E 5th Ave Anchorage Iowa 99501 866-613-1939 http://www.buickofhiawatha.com/
Chevrolet of Helena Chevrolet 730 E 5th Ave Anchorage Montana 99501 866-613-1939 http://www.chevrolethelena.com/
Lithia Chrysler Jeep Dodge of Great Falls Chrysler 730 E 5th Ave Anchorage Montana 99501 866-613-1939 http://www.lithiachryslergreatfalls.com/
Lithia Chrysler Jeep Dodge of Missoula Chrysler 730 E 5th Ave Anchorage Montana 99501 866-613-1939 http://www.lithiachryslermissoula.com/
Lithia Chrysler Jeep Dodge of Helena Chrysler 730 E 5th Ave Anchorage Montana 99501 866-613-1939 http://www.lithiachryslerhelena.com/
Lithia Chrysler Jeep Dodge of Billings Chrysler 730 E 5th Ave Anchorage Montana 99501 866-613-1939 http://www.lithiadodgebillings.com/
Honda of Great Falls Honda 730 E 5th Ave Anchorage Montana 99501 866-613-1939 http://www.greatfallshonda.com/
Lithia Value Autos of Omaha Chrysler 730 E 5th Ave Anchorage Nebraska 99501 866-613-1939 http://www.lithiavalueautosomaha.com/
Lithia Hyundai of Reno Hyundai 730 E 5th Ave Anchorage Nevada 99501 866-613-1939 http://www.lithiahyundaireno.com/
Lithia Chrysler Jeep of Reno Chrysler 730 E 5th Ave Anchorage Nevada 99501 866-613-1939 http://www.lithiachryslerreno.com/
Lithia Lincoln Mercury of Reno GM 730 E 5th Ave Anchorage Nevada 99501 866-613-1939 http://www.lithialincolnreno.com/
Reno Audi Audi 730 E 5th Ave Anchorage Nevada 99501 866-613-1939 http://www.lithiaaudireno.com/
Lithia Reno Subaru Subaru 730 E 5th Ave Anchorage Nevada 99501 866-613-1939 http://www.lithiasubarureno.com/
Lithia Suzuki of Reno Suzuki 730 E 5th Ave Anchorage Nevada 99501 866-613-1939 http://www.lithiasuzukireno.com/
Lithia Volkswagen of Reno Volkswagen 730 E 5th Ave Anchorage Nevada 99501 866-613-1939 http://www.lithiavwreno.com/
Lithia Chrysler Jeep Dodge of Santa Fe Chrysler 730 E 5th Ave Anchorage North Dakota 99501 866-613-1939 http://www.lithiasantafe.com/
Lithia Chrysler Jeep Dodge of Grand Forks Chrysler 730 E 5th Ave Anchorage North Dakota 99501 866-613-1939 http://www.chryslerjeepdodgeofgrandforks.com/
Lithia Ford Lincoln Mercury of Grand Forks Ford 730 E 5th Ave Anchorage North Dakota 99501 866-613-1939 http://www.lithiaflmofgrandforks.com/
Lithia Scion of Grand Forks Scion 730 E 5th Ave Anchorage North Dakota 99501 866-613-1939 http://www.scionofgrandforks.com/
Medford BMW BMW 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.medfordbmw.com/
Lithia Chrysler Jeep Dodge of Roseburg Chrysler 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.lithiadodgeroseburg.com/
Lithia Chrysler Jeep Dodge of Klamath Falls Chrysler 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.lithiaklamathfalls.com/
Lithia Chrysler Jeep Dodge of Medford Chrysler 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.lithiachryslermedford.com/
Lithia Chrysler Jeep Dodge of Grants Pass Chrysler 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.lithiagrantspass.com/
Lithia Chrysler Jeep Dodge of Eugene Chrysler 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.lithiadodgeeugene.com/
Lithia Ford Lincoln Mercury of Roseburg Ford 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.lithiafordroseburg.com/
Lithia Honda of Medford Honda 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.lithiahondamedford.com/
Lithia Nissan of Eugene Nissan 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.lithianissaneugene.com/
Lithia Nissan of Medford Nissan 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.lithianissanmedford.com/
Saturn of Southwest Oregon Saturn 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.saturnofsouthwestoregon.com/
Lithia Scion of Springfield Scion 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.lithiaspringfieldscion.com/
Lithia Scion of Medford Scion 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.medfordscion.com/
Lithia Subaru of Oregon City Subaru 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.lithiasubaruoregoncity.com/
Lithia Toyota of Springfield Toyota 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.lithiatoyotaspringfield.com/
Klamath Falls Toyota Toyota 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.lithiatoyotaklamathfalls.com/
Lithia Toyota of Medford Toyota 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.lithiatoyotamedford.com/
Lithia Volkswagen of Medford Volkswagen 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.lithiavwmedford.com/
All American Chevrolet of San Angelo Chevrolet 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.allamericanchevroletsanangelo.com/
All American Chevrolet of Midland Chevrolet 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.allamericanchevroletmidland.com/
All American Chevrolet of Odessa Chevrolet 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.allamericanchevroletodessa.com/
All American Chrysler Jeep Dodge of San Angelo Chrysler 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.allamericanchryslersanangelo.com/
All American Chrysler Jeep Dodge of Odessa Chrysler 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.allamericanchryslerodessa.com/
Lithia CJD of Bryan/College Station Misc. 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.lithiacjdofbryan.com/
Lithia Dodge of Corpus Christi Chrysler 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.lithiadodgeofcorpuschristi.com/
All American Chrysler Jeep Dodge of Midland Chrysler 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.allamericandodgemidland.com/
Honda of San Angelo Honda 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.hondaofsanangelo.com/
Honda of Midland Honda 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.lithiahondamidland.com/
Honda of Abilene Honda 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.hondaofabilene.com/
Lithia Hyundai of Odessa Hyundai 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.hyundaiofodessa.com/
Lithia Scion of Odessa Scion 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.odessascion.com/
Lithia Toyota of Odessa Toyota 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.odessatoyota.com/
Lithia Toyota of Abilene Toyota 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.toyotaabilene.com/
Lithia Scion of Abilene Scion 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.abilenescion.com/
L2 Auto of Amarillo Misc. 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.l2autoofamarillo.com/
L2 Auto of Lubbock Misc. 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.l2autooflubbock.com/
Camp BMW BMW 730 E 5th Ave Anchorage Washington 99501 866-613-1939 http://www.campbmw.com/
BMW Seattle BMW 730 E 5th Ave Anchorage Washington 99501 866-613-1939 http://www.bmwseattle.com/
Camp Chevrolet Cadillac Chevrolet 730 E 5th Ave Anchorage Washington 99501 866-613-1939 http://www.campchevrolet.com/
Lithia Chrysler Jeep Dodge of Renton Chrysler 730 E 5th Ave Anchorage Washington 99501 866-613-1939 http://www.lithiachryslerrenton.com/
Lithia Chrysler Jeep Dodge of Tri-Cities Chrysler 730 E 5th Ave Anchorage Washington 99501 866-613-1939 http://www.lithiadodgetricities.com/
Lithia Ford Ford 730 E 5th Ave Anchorage Washington 99501 866-613-1939 http://www.lithiaford.com/
Honda of Tri-Cities Honda 730 E 5th Ave Anchorage Washington 99501 866-613-1939 http://www.hondaoftricities.com/
Lithia Hyundai of Renton Hyundai 730 E 5th Ave Anchorage Washington 99501 866-613-1939 http://www.rentonhyundai.com/
Mercedes-Benz of Spokane Mercedes-Benz 730 E 5th Ave Anchorage Washington 99501 866-613-1939 http://www.spokanemercedes.com/
Camp Subaru Subaru 215 E. Montgomery Ave. Spokane Washington 99207 866-681-9741 http://www.campsubaru.com/
The Industry
At approximately $1.0 trillion in annual sales, automotive retailing is the largest retail trade sector in the U.S. and comprises roughly 7% of the GDP. The industry is highly fragmented with the 100 largest automotive retailers generating approximately 13% of total industry revenues in 2006. The number of franchised stores in the U.S. has declined in the last 10 years from approximately 22,427 stores in 1997 to approximately 21,761 in 2006. In addition to these new vehicle outlets, used vehicles are sold by approximately 50,000 independent used vehicle dealers and through private (person to person) transactions. New vehicles can only be sold through automotive retail stores franchised by automotive manufacturers. These franchise stores have designated trade territories under state franchise law protection, which limits the number of new stores that can be opened in any given area.
Consolidation is expected to continue as many smaller automotive retailers are now considering selling or joining forces with larger retailer groups, given the large capital requirements necessary to operate in today’s retail environment. With many owners reaching retirement age, often without clear succession plans, larger, well-capitalized automotive retailers provide an attractive exit strategy. The recent slowdown in the economy and in retail sales is expected to increase the number of sellers.
Unlike many other retailing segments, automotive manufacturers provide unparalleled support to the automotive retailer. Manufacturers often bear the burden of markdown risks on slow-moving inventory as they provide aggressive dealer and customer incentives to clear aged inventory in order to free the inventory pipeline for new purchases. In addition, an automotive retailer’s cash investment in inventory is relatively small, given floorplan financing from manufacturers. Furthermore, manufacturers provide low-cost financing for working capital and acquisitions and credit to consumers to finance vehicle purchases, as well as pay market-rate prices to their dealers for servicing vehicles under manufacturers’ warranties.
Sales in the automotive sector are affected by general economic conditions including rates of employment, income growth, interest rates and consumer sentiment. In 2007, sales were adversely impacted by the slowing economy, including construction-related industries, and higher gasoline prices. In recent years, domestic manufacturers have seen increasing sales pressure from import and luxury brands, resulting in a reduction in their overall market share. U.S. new vehicle sales were 16.1 million units in 2007 compared to 16.6 million units in 2006. Although manufacturer incentives were lower in 2007 than in 2006, Lithia expects that manufacturers will continue to offer incentives on new vehicle sales during 2008 through a combination of repricing strategies, rebates, lease programs, early lease cancellation programs and low interest rate loans to consumers. To complement the manufacturers’ incentive strategy, Lithia employs a volume-based strategy for its new vehicle sales. New vehicle sales usually decline during a weak economy; however, the higher margin service and parts business typically benefits in the same environment, particularly if extended, because consumers tend to keep their vehicles longer. Automotive retailers benefit from their designation as an exclusive warranty and recall service provider of a manufacturer. For the typical manufacturer’s warranty, this provides an automotive retailer with a period of at least 3 years of repeat business for service covered by warranty. Extended warranties can add two or more years to this repeat servicing period.
Profitability amongst automotive retailers will vary and depends in part on local economic conditions, competition and product mix, effective management of inventory, marketing, quality control and responsiveness to customers. In the industry, new vehicles sales typically account for an estimated 59% of a store’s revenues, used vehicles sales typically account for approximately 29% of revenues and the remaining 12% is typically derived from service and parts sales. Finance and insurance sales are included in the new and used vehicle sales numbers. Industry gross profit margins were 13.6% in 2006.
Automotive retailers have much lower fixed overhead costs than automobile manufacturers and parts suppliers. Variable and discretionary costs, such as sales commissions and personnel, advertising and inventory finance expenses, can be adjusted to more closely match new vehicle sales. Variable and discretionary costs account for an estimated 60-65% of the industry’s total expenses. Moreover, an automotive retailer can enhance its profitability from sales of higher margin products and services. Gross profit margins for the parts and service business are significantly higher at approximately 47%, given the labor-intensive nature of the product category. Gross profit margins for finance and insurance are virtually 100% as they are fee driven income items. These supplemental, high margin products and services provide substantial incremental revenue and net income, decreasing reliance on the highly competitive new vehicle sales.
Business Overview
Lithia Motors, Inc. is an operator of automotive franchises and retailer of new and used vehicles and services. As of April 10, 2008, Lithia offered 30 brands of new vehicles and used vehicles in 109 stores in the United States and over the Internet.[1] The company sells new and used cars and light trucks; sells replacement parts; provides vehicle maintenance, warranty, paint and repair services; and arranges related financing, service contracts, protection products and credit insurance for its automotive customers.
Contents
1 Business Overview
2 Franchise Locations
3 The Industry
4 Financials
5 References
Lithia Motors was founded in 1946 and incorporated in 1968. It's two senior executives have managed the company for nearly 40 years. Since the initial public offering in 1996, Lithia has grown from 5 to 109 stores as of April 10, 2008, primarily through its acquisition program that has been accretive to earnings, increasing annual revenues from $143 million in 1996 to $3.2 billion in 2007. In addition, since initial public offering through December 31, 2007, Lithia has achieved compound annual growth rates of 33% per year for revenues and 23% per year for net income from continuing operations.
The company's current new vehicle revenue mix is weighted towards domestic brands at approximately 62%. Management's strategy is to target a more balanced mix between its domestic, import and luxury brands in the years ahead. Approximately 98% of acquisition revenues in 2007 were from import and luxury brands, contributing to an improvement in its import/domestic mix.
Lithia Motors currently offers several customer guarantees that management believes differentiates the company from other competitors in the marketplace. These guarantees are a culmination of several evolution cycles within Lithia that came to fruition in 2007.
For New Vehicles:
A low haggle “Drive it Now” price, always at or below Manufacturer’s Suggested Retail Price (MSRP);
Never any Additional Dealer Markup;
No Documentation Fees, except where state-mandated or controlled; and
For Used Vehicles
A low haggle “Drive it Now” price;
No Documentation Fees, except where state-mandated or controlled; and
A sixty-day, 3000 mile, “if it breaks, we fix it” warranty.
For Service Work
Service provided on your schedule with no appointment necessary;
A three-year, 50,000 mile warranty on all repair work, including parts and labor, to ensure a customer will never pay for the same repair twice; and
A guaranteed price based on the estimate given at the time the car was dropped off.
In 2007 Lithia opened three stand alone used car stores, called L2 Auto. L2 Auto is a web-based sales process that provides a new experience for consumers in the used car market. It offers transparency in every transaction including availability of a broad selection of popular late model used vehicles, clearly marked “negotiation-free” prices based on current market values, a 240 point inspection plan, a sixty-day, 3000 mile “if it breaks, we fix it” warranty, and a three day “no questions asked” return policy.
Franchise Locations
Franchise Name: Dealer: Street Address: City: State: Zip: Phone: Website:
BMW of Anchorage BMW 730 E. 5th Ave. Anchorage Alaska 99501 866-613-1939 http://www.bmwofanchorage.com/
Chevrolet Cadillac of Fairbanks Chevrolet 3300 S. Cushman St. Fairbanks Alaska 99701 866-648-7507 http://www.fairbankschevy.com/
Chevrolet of South Anchorage Chevrolet 9100 Old Seward Hwy Anchorage Alaska 99515 866-612-5667 http://www.anchoragechevrolet.com/
Chevrolet of Wasilla Chevrolet 3700 E Parks Hwy. Wasilla Alaska 99654 866-681-7841 http://www.wasillachevrolet.com/
Lithia Chrysler Jeep Dodge of South Anchorage Chrysler 9600 Old Seward Hwy. Anchorage Alaska 99515 866-648-7922 http://www.lithiachrysleranchorage.com/
Lithia Hyundai of Anchorage Hyundai 5400 Old Seward Hwy. Anchorage Alaska 99518 866-579-4144 http://www.lithiahyundaianchorage.com/
Saab of South Anchorage Saab 9100 Old Seward Hwy. Anchorage Alaska 99515 866-599-2349 http://www.anchoragesaab.com/
BMW of Monterey BMW 1 Geary Plaza. Seaside California 93955 866-681-6838 http://www.bmwmonterey.com/
Lithia Chevrolet of Redding Chevrolet 200 East Cypress Ave. Redding California 96002 866-681-7574 http://www.lithiachevroletredding.com/
Lithia Chrysler Jeep Dodge of Eureka Chrysler 4320 Broadway Eureka California 95503 866-681-8688 http://www.lithiaeureka.com/
Lithia Dodge of Fresno Dodge 6162 N Blackstone Ave Fresno California 93710 866-681-7818 http://www.lithiafresnododge.com/
Lithia Chrysler Jeep Dodge of Santa Rosa Chrysler 730 E 5th Ave Anchorage California 99501 866-613-1939 http://www.lithiadodgesantarosa.com/
Lithia Chrysler Jeep Dodge of Concord Chrysler 730 E 5th Ave Anchorage California 99501 866-613-1939 http://www.lithiadodgeconcord.com/
Lithia Ford of Fresno Ford 730 E 5th Ave Anchorage California 99501 866-613-1939 http://www.lithiafordoffresno.com/
Lithia Hyundai of Fresno Hyundai 730 E 5th Ave Anchorage California 99501 866-613-1939 http://www.lithiahyundaifresno.com/
Lithia Mazda of Fresno Mazda 730 E 5th Ave Anchorage California 99501 866-613-1939 http://www.fresnomazda.com/
Lithia Nissan of Fresno Nissan 730 E 5th Ave Anchorage California 99501 866-613-1939 http://www.lithianissanfresno.com/
Porsche of Monterey Porsche 730 E 5th Ave Anchorage California 99501 866-613-1939 http://monterey.porschedealer.com/service/index.php
Lithia Scion of Vacaville Scion 730 E 5th Ave Anchorage California 99501 866-613-1939 http://www.lithiascionofvacaville.com/
Lithia Scion of Redding Scion 730 E 5th Ave Anchorage California 99501 866-613-1939 http://www.reddingscion.com/
Lithia Suzuki of Fresno Suzuki 730 E 5th Ave Anchorage California 99501 866-613-1939 http://www.lithiasuzukioffresno.com/
Lithia Toyota of Redding Toyota 730 E 5th Ave Anchorage California 99501 866-613-1939 http://www.lithiatoyotaredding.com/
Lithia Volkswagen of Thornton Volkswagen 730 E 5th Ave Anchorage Colorado 99501 866-613-1939 http://www.lithiavwthornton.com/
Chevrolet Cadillac of Twin Falls Chevrolet 730 E 5th Ave Anchorage Idaho 99501 866-613-1939 http://www.twinfallschevrolet.com/
Chevrolet of Caldwell Chevrolet 730 E 5th Ave Anchorage Idaho 99501 866-613-1939 http://www.caldwellchevrolet.com/
Lithia Chrysler Jeep Dodge of Pocatello Chrysler 730 E 5th Ave Anchorage Idaho 99501 866-613-1939 http://www.lithiachryslerpocatello.com/
Lithia Chrysler Jeep Dodge of Twin Falls Chrysler 730 E 5th Ave Anchorage Idaho 99501 866-613-1939 http://www.twinfallsdodge.com
Lithia Ford Lincoln Mercury of Boise Ford 730 E 5th Ave Anchorage Idaho 99501 866-613-1939 http://www.lithiafordboise.com/
Audi Boise Audi 730 E 5th Ave Anchorage Idaho 99501 866-613-1939 http://www.audiofboise.com/
Honda of Pocatello Honda 730 E 5th Ave Anchorage Idaho 99501 866-613-1939 http://www.hondaofpocatello.com/
Lithia Hyundai of Pocatello Hyundai 730 E 5th Ave Anchorage Idaho 99501 866-613-1939 http://www.lithiahyundaipocatello.com/
L2 Auto of Boise Chrysler 730 E 5th Ave Anchorage Idaho 99501 866-613-1939 http://www.l2autoofboise.com/
Acura of Johnston Acura 730 E 5th Ave Anchorage Iowa 99501 866-613-1939 http://www.acuraofjohnston.com/
Audi Des Moines Audi 730 E 5th Ave Anchorage Iowa 99501 866-613-1939 http://www.audiofdesmoines.com/
BMW of Des Moines BMW 730 E 5th Ave Anchorage Iowa 99501 866-613-1939 http://www.bmwdesmoinesiowa.com/
Honda of Ames Honda 730 E 5th Ave Anchorage Iowa 99501 866-613-1939 http://www.ameshonda.com/
Kia of Cedar Rapids Kia 730 E 5th Ave Anchorage Iowa 99501 866-613-1939 http://www.kiaofcedarrapids.com/
Mercedes-Benz of Des Moines Mercedes-Benz 730 E 5th Ave Anchorage Iowa 99501 866-613-1939 http://www.mbzofdesmoines.com/
Lithia Nissan of Ames Nissan 730 E 5th Ave Anchorage Iowa 99501 866-613-1939 http://www.amesnissan.com/
Assured Used Car and Truck Misc. 730 E 5th Ave Anchorage Iowa 99501 866-613-1939 http://www.assuredusedcarandtruckstore.com/
Lithia Volkswagen of Des Moines Volkswagen 730 E 5th Ave Anchorage Iowa 99501 866-613-1939 http://www.lithiavwofdesmoines.com/
Buick GMC Cadillac of Cedar Rapids GM 730 E 5th Ave Anchorage Iowa 99501 866-613-1939 http://www.buickofhiawatha.com/
Chevrolet of Helena Chevrolet 730 E 5th Ave Anchorage Montana 99501 866-613-1939 http://www.chevrolethelena.com/
Lithia Chrysler Jeep Dodge of Great Falls Chrysler 730 E 5th Ave Anchorage Montana 99501 866-613-1939 http://www.lithiachryslergreatfalls.com/
Lithia Chrysler Jeep Dodge of Missoula Chrysler 730 E 5th Ave Anchorage Montana 99501 866-613-1939 http://www.lithiachryslermissoula.com/
Lithia Chrysler Jeep Dodge of Helena Chrysler 730 E 5th Ave Anchorage Montana 99501 866-613-1939 http://www.lithiachryslerhelena.com/
Lithia Chrysler Jeep Dodge of Billings Chrysler 730 E 5th Ave Anchorage Montana 99501 866-613-1939 http://www.lithiadodgebillings.com/
Honda of Great Falls Honda 730 E 5th Ave Anchorage Montana 99501 866-613-1939 http://www.greatfallshonda.com/
Lithia Value Autos of Omaha Chrysler 730 E 5th Ave Anchorage Nebraska 99501 866-613-1939 http://www.lithiavalueautosomaha.com/
Lithia Hyundai of Reno Hyundai 730 E 5th Ave Anchorage Nevada 99501 866-613-1939 http://www.lithiahyundaireno.com/
Lithia Chrysler Jeep of Reno Chrysler 730 E 5th Ave Anchorage Nevada 99501 866-613-1939 http://www.lithiachryslerreno.com/
Lithia Lincoln Mercury of Reno GM 730 E 5th Ave Anchorage Nevada 99501 866-613-1939 http://www.lithialincolnreno.com/
Reno Audi Audi 730 E 5th Ave Anchorage Nevada 99501 866-613-1939 http://www.lithiaaudireno.com/
Lithia Reno Subaru Subaru 730 E 5th Ave Anchorage Nevada 99501 866-613-1939 http://www.lithiasubarureno.com/
Lithia Suzuki of Reno Suzuki 730 E 5th Ave Anchorage Nevada 99501 866-613-1939 http://www.lithiasuzukireno.com/
Lithia Volkswagen of Reno Volkswagen 730 E 5th Ave Anchorage Nevada 99501 866-613-1939 http://www.lithiavwreno.com/
Lithia Chrysler Jeep Dodge of Santa Fe Chrysler 730 E 5th Ave Anchorage North Dakota 99501 866-613-1939 http://www.lithiasantafe.com/
Lithia Chrysler Jeep Dodge of Grand Forks Chrysler 730 E 5th Ave Anchorage North Dakota 99501 866-613-1939 http://www.chryslerjeepdodgeofgrandforks.com/
Lithia Ford Lincoln Mercury of Grand Forks Ford 730 E 5th Ave Anchorage North Dakota 99501 866-613-1939 http://www.lithiaflmofgrandforks.com/
Lithia Scion of Grand Forks Scion 730 E 5th Ave Anchorage North Dakota 99501 866-613-1939 http://www.scionofgrandforks.com/
Medford BMW BMW 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.medfordbmw.com/
Lithia Chrysler Jeep Dodge of Roseburg Chrysler 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.lithiadodgeroseburg.com/
Lithia Chrysler Jeep Dodge of Klamath Falls Chrysler 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.lithiaklamathfalls.com/
Lithia Chrysler Jeep Dodge of Medford Chrysler 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.lithiachryslermedford.com/
Lithia Chrysler Jeep Dodge of Grants Pass Chrysler 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.lithiagrantspass.com/
Lithia Chrysler Jeep Dodge of Eugene Chrysler 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.lithiadodgeeugene.com/
Lithia Ford Lincoln Mercury of Roseburg Ford 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.lithiafordroseburg.com/
Lithia Honda of Medford Honda 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.lithiahondamedford.com/
Lithia Nissan of Eugene Nissan 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.lithianissaneugene.com/
Lithia Nissan of Medford Nissan 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.lithianissanmedford.com/
Saturn of Southwest Oregon Saturn 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.saturnofsouthwestoregon.com/
Lithia Scion of Springfield Scion 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.lithiaspringfieldscion.com/
Lithia Scion of Medford Scion 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.medfordscion.com/
Lithia Subaru of Oregon City Subaru 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.lithiasubaruoregoncity.com/
Lithia Toyota of Springfield Toyota 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.lithiatoyotaspringfield.com/
Klamath Falls Toyota Toyota 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.lithiatoyotaklamathfalls.com/
Lithia Toyota of Medford Toyota 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.lithiatoyotamedford.com/
Lithia Volkswagen of Medford Volkswagen 730 E 5th Ave Anchorage Oregon 99501 866-613-1939 http://www.lithiavwmedford.com/
All American Chevrolet of San Angelo Chevrolet 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.allamericanchevroletsanangelo.com/
All American Chevrolet of Midland Chevrolet 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.allamericanchevroletmidland.com/
All American Chevrolet of Odessa Chevrolet 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.allamericanchevroletodessa.com/
All American Chrysler Jeep Dodge of San Angelo Chrysler 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.allamericanchryslersanangelo.com/
All American Chrysler Jeep Dodge of Odessa Chrysler 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.allamericanchryslerodessa.com/
Lithia CJD of Bryan/College Station Misc. 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.lithiacjdofbryan.com/
Lithia Dodge of Corpus Christi Chrysler 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.lithiadodgeofcorpuschristi.com/
All American Chrysler Jeep Dodge of Midland Chrysler 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.allamericandodgemidland.com/
Honda of San Angelo Honda 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.hondaofsanangelo.com/
Honda of Midland Honda 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.lithiahondamidland.com/
Honda of Abilene Honda 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.hondaofabilene.com/
Lithia Hyundai of Odessa Hyundai 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.hyundaiofodessa.com/
Lithia Scion of Odessa Scion 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.odessascion.com/
Lithia Toyota of Odessa Toyota 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.odessatoyota.com/
Lithia Toyota of Abilene Toyota 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.toyotaabilene.com/
Lithia Scion of Abilene Scion 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.abilenescion.com/
L2 Auto of Amarillo Misc. 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.l2autoofamarillo.com/
L2 Auto of Lubbock Misc. 730 E 5th Ave Anchorage Texas 99501 866-613-1939 http://www.l2autooflubbock.com/
Camp BMW BMW 730 E 5th Ave Anchorage Washington 99501 866-613-1939 http://www.campbmw.com/
BMW Seattle BMW 730 E 5th Ave Anchorage Washington 99501 866-613-1939 http://www.bmwseattle.com/
Camp Chevrolet Cadillac Chevrolet 730 E 5th Ave Anchorage Washington 99501 866-613-1939 http://www.campchevrolet.com/
Lithia Chrysler Jeep Dodge of Renton Chrysler 730 E 5th Ave Anchorage Washington 99501 866-613-1939 http://www.lithiachryslerrenton.com/
Lithia Chrysler Jeep Dodge of Tri-Cities Chrysler 730 E 5th Ave Anchorage Washington 99501 866-613-1939 http://www.lithiadodgetricities.com/
Lithia Ford Ford 730 E 5th Ave Anchorage Washington 99501 866-613-1939 http://www.lithiaford.com/
Honda of Tri-Cities Honda 730 E 5th Ave Anchorage Washington 99501 866-613-1939 http://www.hondaoftricities.com/
Lithia Hyundai of Renton Hyundai 730 E 5th Ave Anchorage Washington 99501 866-613-1939 http://www.rentonhyundai.com/
Mercedes-Benz of Spokane Mercedes-Benz 730 E 5th Ave Anchorage Washington 99501 866-613-1939 http://www.spokanemercedes.com/
Camp Subaru Subaru 215 E. Montgomery Ave. Spokane Washington 99207 866-681-9741 http://www.campsubaru.com/
The Industry
At approximately $1.0 trillion in annual sales, automotive retailing is the largest retail trade sector in the U.S. and comprises roughly 7% of the GDP. The industry is highly fragmented with the 100 largest automotive retailers generating approximately 13% of total industry revenues in 2006. The number of franchised stores in the U.S. has declined in the last 10 years from approximately 22,427 stores in 1997 to approximately 21,761 in 2006. In addition to these new vehicle outlets, used vehicles are sold by approximately 50,000 independent used vehicle dealers and through private (person to person) transactions. New vehicles can only be sold through automotive retail stores franchised by automotive manufacturers. These franchise stores have designated trade territories under state franchise law protection, which limits the number of new stores that can be opened in any given area.
Consolidation is expected to continue as many smaller automotive retailers are now considering selling or joining forces with larger retailer groups, given the large capital requirements necessary to operate in today’s retail environment. With many owners reaching retirement age, often without clear succession plans, larger, well-capitalized automotive retailers provide an attractive exit strategy. The recent slowdown in the economy and in retail sales is expected to increase the number of sellers.
Unlike many other retailing segments, automotive manufacturers provide unparalleled support to the automotive retailer. Manufacturers often bear the burden of markdown risks on slow-moving inventory as they provide aggressive dealer and customer incentives to clear aged inventory in order to free the inventory pipeline for new purchases. In addition, an automotive retailer’s cash investment in inventory is relatively small, given floorplan financing from manufacturers. Furthermore, manufacturers provide low-cost financing for working capital and acquisitions and credit to consumers to finance vehicle purchases, as well as pay market-rate prices to their dealers for servicing vehicles under manufacturers’ warranties.
Sales in the automotive sector are affected by general economic conditions including rates of employment, income growth, interest rates and consumer sentiment. In 2007, sales were adversely impacted by the slowing economy, including construction-related industries, and higher gasoline prices. In recent years, domestic manufacturers have seen increasing sales pressure from import and luxury brands, resulting in a reduction in their overall market share. U.S. new vehicle sales were 16.1 million units in 2007 compared to 16.6 million units in 2006. Although manufacturer incentives were lower in 2007 than in 2006, Lithia expects that manufacturers will continue to offer incentives on new vehicle sales during 2008 through a combination of repricing strategies, rebates, lease programs, early lease cancellation programs and low interest rate loans to consumers. To complement the manufacturers’ incentive strategy, Lithia employs a volume-based strategy for its new vehicle sales. New vehicle sales usually decline during a weak economy; however, the higher margin service and parts business typically benefits in the same environment, particularly if extended, because consumers tend to keep their vehicles longer. Automotive retailers benefit from their designation as an exclusive warranty and recall service provider of a manufacturer. For the typical manufacturer’s warranty, this provides an automotive retailer with a period of at least 3 years of repeat business for service covered by warranty. Extended warranties can add two or more years to this repeat servicing period.
Profitability amongst automotive retailers will vary and depends in part on local economic conditions, competition and product mix, effective management of inventory, marketing, quality control and responsiveness to customers. In the industry, new vehicles sales typically account for an estimated 59% of a store’s revenues, used vehicles sales typically account for approximately 29% of revenues and the remaining 12% is typically derived from service and parts sales. Finance and insurance sales are included in the new and used vehicle sales numbers. Industry gross profit margins were 13.6% in 2006.
Automotive retailers have much lower fixed overhead costs than automobile manufacturers and parts suppliers. Variable and discretionary costs, such as sales commissions and personnel, advertising and inventory finance expenses, can be adjusted to more closely match new vehicle sales. Variable and discretionary costs account for an estimated 60-65% of the industry’s total expenses. Moreover, an automotive retailer can enhance its profitability from sales of higher margin products and services. Gross profit margins for the parts and service business are significantly higher at approximately 47%, given the labor-intensive nature of the product category. Gross profit margins for finance and insurance are virtually 100% as they are fee driven income items. These supplemental, high margin products and services provide substantial incremental revenue and net income, decreasing reliance on the highly competitive new vehicle sales.
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