Advertisement

CALIFORNIA: News and Insight on Business in the Golden
State

3 Car Dealerships in Cerritos Sold

Autos: Purchase by owner of Norm Reeves Honda another example of consolidation that is changing the industry.

November 10, 1998|JOHN O'DELL | TIMES STAFF WRITER

The owner of the Norm Reeves Honda Superstore dealerships said Monday that he has purchased three new-car outlets in Cerritos Auto Square, a deal that gives him about a third of the volume in the nation's largest auto mall.

Norm Reeves owner Dave Conant purchased Cerritos Ford, Cerritos Lincoln-Mercury & Isuzu and Cerritos Infiniti from longtime owner Ron Gregoire in a private transaction. Terms were not disclosed.

The acquisitions provide Conant, who took over the Reeves Honda Superstore operations in Cerritos and Huntington Beach in the late 1980s, a base from which to pursue aggressive expansion plans. His Honda store in Cerritos is already the nation's largest Honda dealership, with 1997 sales of $181.4 million, according to Ward's Dealer Business magazine.

Conant said he intends to enlarge the three former Gregoire dealerships and expects his share of sales at the Cerritos auto mall to climb to as much as 45% in the next few years.

Conant is pursuing an expansion-through-consolidation strategy that has been changing the face of the new-car retailing world in recent years.

Spurred by Republic Industries Inc.'s relentless pursuit of auto franchises--it is the nation's largest new-car dealer, with more than 360 franchises in 18 states--independent dealers are moving to protect their flanks by increasing the number and kinds of cars and services they offer.

"They are reaching for economies of scale," said Dwight Hanger, head of the West Coast automotive consulting practice at Ernst & Young. "The dynamics of the industry are driving them to consolidation."

Conant also has opened an off-site car repair facility in Irvine and a used-car dealership in Norwalk.

Republic's expansion "has forced private owners like me to play our hands sooner," Conant said.

Florida-based Republic has been paying premium prices for large metropolitan-area dealerships, prompting many franchise owners to put their properties into play and forcing potential suitors to come to the table quickly to avoid being beaten by Republic or another competitor.

The combined Conant properties in Cerritos will have about 450 employees. Initially, the additional dealerships will boost Conant's average monthly sales at the auto mall by about 38% to 1,825 new and used vehicles.

Conant's Norm Reeves Honda Superstores are not part of the Norm Reeves auto dealership chain in Temecula.

Conant said his new Cerritos stores will continue operating under their existing names.

Advertisement
Los Angeles Times Articles
|
|
|