Well-Known Dealer Groups Make Significant Investments In Domestic Franchises

Implications: With all of the bad news and dire predictions surrounding the Detroit Three, its good to occasionally find some good news to comment on.

Analysis: Some stock market investors like to follow the big money. See what the big boys are doing and do the same is the investment strategy. While the news is full of dealership closings and consolidations, it may be instructive to see what some of the large dealer groups (and I don't mean the public groups) are doing.

While I would love to write more happy news about the car business, this has not been a very happy year for most auto dealers. And a difficult year turned downright ugly when the buying public finally discovered the price at which gasoline would alter their car buying preferences. The collapse of the truck and SUV markets in the past three months was both disheartening and staggering.

That is why, when these two news items came to my attention, I just had to include them in a GLG News article.

The Van Tuyl Group, with 65  dealership, locations in ten states reported the purchase of a Lincoln Mercury and a Ford store in Scottsdale AZ, with plans to combine them under one roof. The Fred Beans Automotive group with 23 brands in and around Doylestown PA. received final approval for a $10 million GM sales and service facility in Doylestown.

To be sure, both the Van Tuyl Group and Ted Beans are invested in all kinds of brands. But in recent times the trend has been away from domestic makes for many of the larger dealer groups and toward high-volume imports and high-line luxury brands.

So it is significant when dealer groups who have a wide variety of brands make serious investments in domestic franchises that many see as tainted or at least shaky.

The Van Tuyl acquisition seems to be a classic consolidation move- bringing together two separate dealerships under one roof. For whatever reason, the two previous owners of these two points could not come to that end on their own.

Consolidation may also have played a role in the Fred beans expansion. The new GM center will service a Chevrolet dealership as well as a Buick-Pontiac-GMC franchise. The 38,000 square-foot facility will be right next door to an existing Fred beans Cadillac Saab point, making it a huge GM shopping center. Do you think GM is happy?