Parties look to expand Internet-powered brand, spread business model
Parties look to expand Internet-powered brand, spread business model
Dave Smith Auto Group retailed 9,298 new vehicles in 2014 in its two Kellogg, Idaho, dealerships: a Chrysler-Dodge-Jeep-Ram store and a Chevrolet-Cadillac-Buick-GMC store.
DEALERSHIP BUY/SELL
Amy Wilson 
Automotive News
April 25, 2015 – 12:01 am ET
RFJ Auto Partners Inc., a fast-growing new dealership group backed by private equity, acquired two of the highest-volume stores in the U.S. this week when it bought Dave Smith Auto Group.
The deal marks RFJ’s expansion to the Northwest. The Dave Smith stores, in Kellogg, Idaho, will be a base for further growth in that region, said Rick Ford, RFJ’s president. The owners of Dave Smith, led by Ken Smith, now become partners in RFJ and will help the Plano, Texas, dealership group replicate the Dave Smith approach at other RFJ stores going forward.
“We’re going to really expand the Dave Smith brand throughout the Northwest corridor,” Ford told Automotive News. “It’s our intention for RFJ to adopt a lot of the operating processes the Dave Smith brand has been so good at developing.”
Dave Smith could ultimately become the national brand for the dealership group once its approach has successfully spread across the company, Ford said. While there’s no firm decision on that today, Ford is counting on acquiring more stores in the Northwest — and soon. He and Ken Smith were meeting with other potential sellers even before the Dave Smith deal was finalized on Monday, April 20.
For Ken Smith, the deal is a way for his family to expand.
“Something we’ve wanted to do for a long time is take the Dave Smith name out on the road and invest in some other dealerships, but it takes a lot of cash to do that,” Smith said.
Formed in February 2014 with the backing of Jordan Co., a New York private equity firm, RFJ has the cash. It is now up to 24 dealerships. RFJ’s goal is to represent every brand in the industry with stores under the Dave Smith name in the Northwest, Ford said. The company will focus on acquiring stores representing mainstream brands in 2015 and start looking to luxury-brand stores in 2016, he said.
Smith will be president of RFJ’s Northwest platform and dealer principal for all acquisitions in the Northwest going forward. His siblings, Eric Smith and Michelle Dahl, also will be partners. Ford and Smith declined to share terms of the deal.
Ken Smith: Deal is a way for his family to expand
Dave Smith Auto Group ranks No. 111 on the Automotive News list of the largest 150 dealership groups in the U.S. with retail sales of 9,298 new vehicles in 2014. The family has done that with just two dealerships: a Chrysler-Dodge-Jeep-Ram store and a Chevrolet-Cadillac-Buick-GMC store. The former is one of the largest Chrysler-Dodge-Jeep-Ram dealerships in the U.S.
The group, which has a huge Internet business, ranks first among U.S. dealership groups for new retail throughput, with average sales of 4,649 new vehicles per store, according to the Automotive News Data Center.
The deal brings RFJ’s annualized revenue to around $1.5 billion and annualized new-car sales to more than 23,000 vehicles, Ford said. Its volume would now rank it among the country’s largest 25 dealership groups, he said. With several more deals already under contract or in negotiations, Ford said, he expects RFJ to rank in the top 20 by the time Automotive News tallies its largest 150 list anew next March.
He predicted: “We’ll ultimately end up in the top 10 before it’s all said and done.”
The Dave Smith approach will spread to RFJ’s other stores. Best practices to replicate include one-price selling, emphasis on accessories and expanded inventory, Ford said. Dave Smith has strong sales and customer satisfaction ratings, he said, and typically has more vehicles in inventory than there are people living in its tiny home base of Kellogg, Idaho, with its population of just more than 2,000.
“We believe the future of our business is continuing to be more online and providing the customer an experience that they’ll want to come a distance for,” Ford said. “We think those are the keys to success in the future of the automobile industry, and obviously at Dave Smith, they’ve proven that successful formula.”
You can reach Amy Wilson at awilson@crain.com.
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