February 20, 2019 — The Prime Automotive Group added six dealerships last week when it acquired the Marubeni America Corporation’s Auto Gallery in Norwood, MA. The fast-growing Prime, backed by GPB Capital, now has 68 dealerships with revenues approaching $3.5 billion.
The transaction is the third large dealership buy-sell of the year and continues the brisk activity of 2018 which saw nearly 400 rooftops exchange hands. Florida’s Ed Morse Automotive acquired three stores and seven franchises in Dallas from the Roundtree Automotive Group in January. Earlier this month, Asbury Automotive Group acquired the four-store Bill Estes Automotive Group in Brownsburg, IN.
Marubeni’s Gallery stores include BMW, Mazda and Volkswagen dealerships in Norwood, MA; BMW and Mini stores in Rockland, MA; and a Honda store in Reading, MA. Marubeni is one of four Japanese holding companies that entered the U.S. automotive dealership market in the late 1980s with limited success.
Sumitomo Corporation exited the market in recent years based on information on its website. The other two still have stores in the U.S. The Sojitz Corporation has an Audi store and three BMW dealerships in California while Itochu Corporation has a dealership in southern Alabama.
Based on the number of stores, Marubeni proved to be the most successful. Beginning in 1989, it added three Nissan stores over 10 years (which it sold in 1999 and 2000), and added the 11-store Long Island Automotive Group and the Gallery group a few years later. It began shedding stores a few years ago, selling the Long Island group (at the time consisted of five stores) in 2014 and is now out of the U.S. market with the sale of the Gallery dealerships.
Gallery Automotive Group’s CEO and president Gordon Chu has been named as Prime’s regional market chief operator and will add other South Shore dealerships owned by Prime to his purview.
With GPB Capital’s backing, Prime has grown quickly. Accordingly to the GPB Capital website, GPB Capital is a New York-based alternative asset management firm focusing on acquiring income-producing private companies. GPB Capital provides its portfolio companies with strategic planning, managerial insight, and capital needed to enable strong businesses to work towards the next level of growth and profitability. GPB acquired private equity firm’s Abrams Capital’ majority stake in Prime in the fall of 2017. Today, Prime has dealerships across nine states and is one of the top 10 groups in the U.S. based on total revenue (Ward’s Megadealer 100 2018 ranking). Judging from the chatter we’re hearing on the street, Prime has more deals in the pipeline.
David Rosenberg, a second-generation dealer, and is the CEO and founder of Prime (he was recently named as one of Automotive News 2018 All-Stars), has put together a team consisting of COO Marty Collins, former head of the Gulf States Toyota distributorship, and Randy Callison, VP Corporate Development, who previously spent several years leading Group 1 Automotive’s acquisition strategy. Scott Naugle is the Managing Director of GPB’s automotive strategy with past roles including Financial Officer for the Holman Automotive Group and a Director for the DCH Auto Group.
GPB”s GPB Automotive Portfolio fund raised more than $674 million to fund dealership acquisitions. Two sister-diversified funds also invest in dealerships. Combined, GPB’s nine private placement funds have raised a reported $1.8 billion.