National dealer buys Carbone Automotive
BENNINGTON >> Acquisition of the Carbone Automotive Group by one of the nation's largest dealership networks, Oregon-based Lithia Motors, means that changes are on the way — but they'll be positive ones, a company spokesman said.
Tom Dobry said Lithia Motors, a Fortune 500 listed company with 150 dealerships and about 10,000 employees around the U.S., has no intention of sending in anyone from corporate headquarters to oversee the local business.
He said the regional auto group, serving nine stores representing 13 auto brands in Bennington and upstate New York, will rely on continued leadership from CEOs Enessa Carbone and Alex Carbone.
"We believe in decentralization," Dobry said in a telephone interview. "We see that as an advantage. We absolutely will rely on [the Carbones]."
He added that Lithia Motors is "one of a few publicly owned companies in our sector that does it this way," and the company has followed this formula as it expands into the Northeast from its base areas throughout the western states.
The recent Carbone group acquisition was only the second in the East after a similar agreement was reached with the New Jersey-based auto group DCH Auto Group two years ago.
Employees and owners at other dealerships in the Vermont-New York region were not convinced last week that the arrival of Lithia Motors will be good for their businesses or for local consumers.
Jim Langway owns a dealership selling multiple auto brands with locations in Manchester, where he lives, in Bennington, and in Newport, R.I.
"This is definitely the wave in our industry right now," he said of dealership acquisitions. "There is so much consolidation."
In fact, Langway said, his group has added locations and brands in the past few years, and that has allowed economies of scale and competitive pricing on his vehicles. But he said there is a difference between a small regional group and a national firm, in that smaller groups are more likely to retain local employees and loyal customers.
Tom Lyons Jr., the business manager at Bennington Subaru, said the entrance of Lithia Motors to this area could bring negative effects similar to those following in the wake of a big-box chain store.
"It's like a big company like Walmart," Lyons said, which he said could undercut the local auto industry on price until it has reduced the competition and then raise prices after consumers have lost other choices.
As with the Bennington and Manchester dealerships acquired by Langway, the Subaru business here is now part of a regional network, AutoSaver Group, which sells multiple brands in at least 10 locations in New Hampshire and Vermont.
The group is, however, really a family owned business, Lyons said, built up by two partners, Abel Toll and Ronney Lyster.
New construction expected
Dobry said that with Lithia Motors the Bennington area can expect see new construction over the next year or two.
"One thing we will do is start breaking out each franchise more," he said, meaning there eventually could be 13 separate buildings housing the Carbone brands instead of the current nine.
The Bennington Carbone campus off Route 67A has a building housing both Toyota and Honda vehicles and an adjacent, recently built structure for Ford and Hyundai vehicles.
In most cases, Dobry said, "we build new, but sometimes just an upgrade is needed."
He said Lithia Motors will work with the auto manufacturers to meet their needs and with local business and municipal officials on the acquisition of land, if needed, and in constructing new buildings. The goal will be to locate those franchises that are moved "as close to the existing location as possible," he said.
That process is one Lithia Motors is very familiar with and usually takes place over 18 to 24 months, he said, adding that at any given time Lithia Motors "might have 25 projects under way around the country. It's constant."
While management of employees will remain under the local leadership, Dobry said some tasks, such as accounting and paperwork functions, will be done companywide to increase efficiency, and there will be new lending options available through Lithia Motors, as well as greater access to specific vehicle models across the region and nationwide.
There will also be an in-house lending option, he said, available for "credit-challenged" customers.
For employees, Dobry said there will be increased options for advancement across the entire company.
Asked if Lithia has explored other acquisitions in the Vermont-New York-Massachusetts region, Dobry said the firm "is inclined to look at new areas, although some can be a little small. We do evaluate all of them."
While the Carbone family "reached out to us," he said, Lithia has always had a long-range goal of acquiring auto groups on the East Coast, and the positive experience it has had with the DCH group was an initial investment that turned out well.
Dobry said of the agreement with the Carbones, "We prefer 'combination' or 'merger'" when talking about new dealership groups. But he said, "Technically, it is an acquisition as we acquire their assets."
In announcing an agreement with Lithia Motors and the DCH Auto Group, Enessa Carbone said, "Our shared resources will help us grow while preserving the heritage of the Carbone Automotive Group."
She added, "The Lithia-Carbone combination will provide us additional capital to bring the Carbone experience to more communities and dealerships throughout the Northeast ... Being part of a nationwide family such as Lithia gives us the ability to share best practices, learn from each other, share resources, and become more competitive. As we enter new markets and add stores it will create more opportunities for each of our associates to advance their careers."
Carbone Auto was established in 1929 by Joe Carbone and is now listed as the 94th largest auto group in the country. Enessa Carbone and Alex Carbone are grandchildren of the founder.
In addition to its Vermont dealerships, the Utica, N.Y.-based Carbone has locations in Troy and Yorkville in New York, with Chevrolet, Buick, Cadillac and GMC brands, as well as Ford, Chrylser, Jeep, Dodge Ram, Nissan, BMW and Subaru vehicles.
Lithia Motors, based in Medford, Ore., was founded in that state in 1946 by Walt Deboer, who was soon joined by his son, Sidney Deboer. The current CEO is Bryan Deboer.
The company lists 150 dealerships selling 30 auto brands in 16 states, including most in the Northwest, Alaska and Hawaii and Texas and New Mexico.
In 1996, the company went public with its stock trading on the New York Stock Exchange.
More information about Lithia can be found at www.lithia.com.
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