While Lithia Motors is focused on building out its online dealership strategy, the Oregon-based car retailer continues to make moves to expand its brick-and-mortar footprint.
Lithia has gobbled up a dozen car dealerships in the past two months, padding its network with locations from New York state to California.
Bryan Deboer, who has led the $6.9 billion company for more than three decades, is looking to continue growing its roster of stores.
“We made a little over a quarter billion dollars in net profit in Q3, which is a good start to be able to buy even more,” Deboer said in a conversation with CNBC’s Jim Cramer on “Mad Money” Wednesday.
Lithia expects its new locations, which include dealerships peppered across in New York, Texas, Tennessee and California, could produce more than $1.75 billion in annual revenues this year.
Lithia, which is one of the largest U.S. automotive group retailers with more than 200 locations in 18 states, sells both new and used cars. The company posted $3.6 billion in revenue in the third quarter, which saw a rebound in used car sales amid the pandemic. That number was up almost 9% from the year prior, powered by a 20% spike in used vehicle sales, according to Factset.
Same-store used vehicle sales also increased more than 11%, as consumers doled out more money on cars. Net income came in at $158.6 million, more than double that from the same period last year.
“Fortunately, a lot of people have a lot of extra money in their pockets because they’re not taking vacations and they’re not buying coffee when they go to and from work, because they’re working from home,” Deboer said.
Used car and truck prices increased by nearly 7% in September, signaling that the market has not been able to match demand for vehicles as travelers avoid public transportation and airplanes for fears of contracting coronavirus, Reuters reports. The car market has been one of the bright spots in an economy marred by a pandemic-induced slowdown.
The company is also investing heavily in its online operations with hopes of taking advantage of customers where they’re at, as individuals shift their shopping habits to the internet at an even faster-than-expected pace.
“We’re in the forefront of being able to roll out our Driveway strategy, which is an e-commerce solution,” Deboer said.
Driveway, where users can search for, purchase and sell motorized vehicles, is expected to be available in six regions by 2023. Lithia expects Driveway, which can also be used to schedule at-home car service, could bring in $9 billion in annual revenue in five years.
“You can have your car service in your slippers,” Deboer said.
Shares of Lithia barely moved in Wednesday’s session, closing up a couple pennies at $260.09. The stock is up 77% year to date.