COSTA MESA — A pair of South Bay auto dealers have been quietly buying up high-profile Orange County dealerships in the past month, including a Rolls-Royce dealership and three Costa Mesa franchises owned by former American Honda officials involved in a kickback scheme.
South Bay AutoHaus owner William Adkins and partner Jerry Heuer, an investor in a string of Torrance and Santa Monica dealerships, have purchased Rolls-Royce dealer Newport Auto Center in Newport Beach and Costa Mesa Infiniti for an undisclosed amount. The two also have an agreement to buy Costa Mesa Honda and are negotiating for the purchase of Costa Mesa Mitsubishi.
Newport Auto Center had been owned by Steven Bren, a son of Irvine Co. owner Donald L. Bren. In addition to Rolls-Royces, the dealership sold Chevrolets, Audis, Porsches and Bentleys. It has long been reported to be in financial difficulty because of the recession and the short-lived federal luxury tax on high-priced autos.
The three Costa Mesa dealerships were owned by Mark L. Benson and Edward A. Temple, former American Honda executives who earlier this year pleaded guilty to felony charges in an ongoing federal fraud and bribery probe of Honda franchise activity in the late 1980s.
Benson and Temple still own the Honda franchise, and Heuer said that he and Adkins are purchasing it from them, rather than from Torrance-based American Honda Motor Co. Inc. None of the Benson-Temple dealerships were in financial trouble; their legal problems appear to have prompted the sales.
Honda officials declined to comment. Benson declined comment and Temple could not be reached. Jim Haslem, an attorney for Benson and the three Costa Mesa dealerships, said he was "not aware of any pressure brought to bear" by Nissan's Infiniti division to force the sale of the Infiniti franchise.
At Cypress-based Mitsubishi Motor Sales of America, spokesman Kim Custer said that the company is in the final stages of terminating Benson and Temple's Mitsubishi franchise because of their legal problems and could not discuss the matter further. Haslem said that Benson and Temple surrendered the franchise.
Heuer said that he and Adkins are purchasing the Mitsubishi franchise, which has been closed for several weeks, directly from the company.
Heuer would not discuss other circumstances of the sales. But industry sources say that Honda and Mitsubishi had been pressuring Benson and Temple to sell or surrender their dealerships. Most auto companies have so-called morals clauses in their franchise agreements that can be used to oust dealers convicted of serious crimes.
Benson pleaded guilty to one count of mail fraud, and Temple pleaded guilty to a count of conspiracy in connection with their activities as zone sales managers with American Honda in the late 1980s.
New car franchises in recessionary Southern California have not been moving at premium prices in recent years. The troubled backgrounds of the four Orange County dealerships suggest those sales do not signal a resurgence in the industry, said Kevin Allen, executive director of the Orange County Motor Car Dealers Assn.
"However," he added, "Orange County's economy is starting to pick up and auto sales are picking up, so this is a good time to buy a dealership."
Heuer said he and Adkins began looking several months ago for franchises to acquire outside of the South Bay. "We have been hammered so hard by the recession, and with the continuing cuts in aerospace employment, we felt that we had to diversify," he said.
They began talks with Honda, Mitsubishi and Benson and Temple about the Orange County dealers' three operations, he said, and almost simultaneously learned that Steven Bren was interested in selling Newport Auto Center.
"We figured that if we were going to be in Costa Mesa, we might as well be in Newport Beach too," Heuer said. "We like to cluster our stores because we can get certain economies of scale that way."
Another Newport Beach franchise that could interest the two South Bay dealers is Newport Imports, the bankrupt Jaguar and Range Rover dealership that was seized and closed by its bankers last week.