David Wilson, whose Wilson Automotive Group holds Orange County’s largest collection of car dealerships, recently closed his biggest sale.
The Orange-based company, whose dealerships in OC last year reported more than $1.4 billion in sales for the 12 months ended June 30, 2023, last week said that it had sold its two area Lexus dealers, Newport Lexus and Tustin Lexus.
Those two dealers each sell over 1,500 new vehicles per year, with combined 12-month sales of about $280 million for the 12 months ended June 30, 2023.
The buyer is Group 1 Automotive Inc. (NYSE: GPI), a Houston-based firm counting a $3.7 billion valuation that’s one of the largest dealership groups in the U.S., with 200 locations.
It also has holdings in the U.K.
The deal gives Group 1 a larger presence in OC and its expansive auto market: its only other local holdings are Mercedes-Benz of Anaheim and Toyota of Anaheim. Group 1 now has 10 locations in California, while Wilson Automotive still counts 16 locations after the sale, including eight spots in OC.
Tustin Lexus ranked No. 14 among OC’s largest dealers last year by sales, while Newport Lexus, which opened at the corner of MacArthur Boulevard and Jamboree Road—Wilson has called the intersection “the most important corner in Orange County”—in 2006 at a reported cost of $75 million, ranked No. 11, according to the Business Journal’s annual auto dealers list.
High Price
Terms of the deal were not immediately disclosed.
Regulatory filings indicate that Group 1, which has been embarking on a strategy of switching out low-performing dealers in its portfolio for larger, higher volume locations, has been paying in the range of $60 million to $80 million per dealer the past two years.
Sources familiar with the deal tell the Business Journal that Wilson’s two Lexus properties went for considerably more, citing a combined price closer to $300 million as being likely.
Such a price would place the deal among the highest on record for dealers in the U.S.
The Newport Beach location was hailed as “the flagship Lexus dealership in the world” at the time of opening, touting a showroom the size of a football field and numerous amenities.
Parties directly involved in the transaction declined to discuss the specific terms of the deal.
Sources tell the Business Journal that Group 1 reached out to Wilson Automotive near the start of the year with interest in the two businesses and the executive initially declined.
A partner of the Tustin and Newport locations with 25% ownership then encouraged the sale, in order to liquidate their stake in the business.
It took less than 60 days to close the deal.
Orange Roots
Wilson purchased his first dealership, Toyota of Orange, in 1985 after being its general manager for three years. He now counts 16 dealers in his portfolio with annual sales totaling around $3.4 billion following the sale.
Toyota of Orange ranked No. 4 on the Business Journal’s list of auto dealers from last October, reporting $280 million in sales volume for 12 months ended June 30, 2023.
Other top-performing area dealers are Toyota of Huntington Beach and David Wilson’s Villa Ford, reporting $262 million and $217 million in sales volume during the same period, respectively.
Wilson Automotive has no plans to sell any other dealerships and is in the process of trying to acquire two more locations later this year, according to sources. Any future locations would be outside of California.
New Owner
Last year, Group 1 shed 11 dealerships with an average revenue of $37 million and added six other dealerships with an average revenue of $183 million.
The two new Lexus franchises are expected to increase the organization’s annual sales by generating $350 million for the year, “bringing 2024 year-to-date total acquired revenue for Group 1 to $850 million,” officials said in a statement.
Lexus vehicles had one of the largest percentage gains among the top 20 selling brands in OC last year, according to the Orange County Automobile Dealers Association (OCADA).
The automaker saw OC registrations up 15% from the year before.
