Once registered, you can:

  • - Read additional free articles each month
  • - Comment on articles and featured creative work
  • - Get our curated newsletters delivered to your inbox

By registering you agree to our privacy policy, terms & conditions and to receive occasional emails from Ad Age. You may unsubscribe at any time.

Are you a print subscriber? Activate your account.


By Published on .

The growing number of publicly held auto dealerships, led by H. Wayne Huizenga's Republic Industries, are beginning to flex their advertising muscle in local markets. Clout by these publics, in more general terms, is an issue that concerns carmakers.

Republic and eight other publicly held groups charted by Advertising Age sold 449,319 new vehicles in the U.S. last year, or about 3% of the industry's sales. That number should rise to 6% this year, says Jeffrey DeBoer, VP-finance and investor relations of Lithia Motors, a publicly held group.


Growth will continue to come by acquisition and from new players like used-car dealer CarMax, a publicly held company controlled by Circuit City Stores. CarMax has bought several new-car dealerships in the past year.

As of late August, Republic had purchased or signed deals to acquire 221 new-car dealerships with 338 franchises. Republic reported early this month it would acquire for $145 million in cash Cross-Continent Auto Retailers.

Republic says it spent $318 million last year on advertising, a good portion of that on the 26 used-car AutoNation USA superstores.

Republic says it saves 35% to 55% on its media bills in certain markets, taking advantage of bulk buys. Much smaller Lithia Motors, a 28-store chain in midsize markets, says clustered dealerships help it save about 25% to 30% in media costs. Lithia spent $2.7 million on advertising last year -- a budget more typical of other publics.


Fear of excessive clout -- and advertising is just a tip of the clout iceberg -- has led carmakers to impose limits on the number of dealerships held under group ownership.

General Motors Corp. early this year set 90 as the maximum; Chrysler Corp. set a national max at 10, Toyota Motor Corp. at seven.

Ownership quotas are issues of control. The publics have financial clout and more sophisticated operating systems than many of the thousands of independent dealers with which automakers do business. The rise of the publics is largely traced to inefficiencies in an archaic system that is highly fragmented.

So far, Lithia is the only public chain advertising its new cars under a single brand. But that is about to change. United Auto Group, owner of 104 franchises in 16 states, plans to integrate the United name into the original names of its dealerships, says David Bright, United's senior VP-communications. United also is exploring consolidating advertising, currently handled from eight hubs.


Republic will begin co-branding its new-car dealerships next year, says Bob Thomas, exec VP-strategic marketing at Republic. "We'll definitely start to put AutoNation on our [new-car] dealerships in some way."

Industry watchers like Sameer Desai at A.T. Kearney see brand recognition for Republic still a long way off. Efficiencies will be lacking until brands are consolidated in single markets, he says, and it will take time for real corporate management and ownership to take hold.

Most Popular
In this article: