Article Excerpt:
TWST: What is United Auto Group?Mr. Pordon: We are a publicly-traded automotive retailer and the second largest publicly traded auto retailer in the United States. As of today, we have 247 franchises, and we are really a worldwide and international company. We operate in 20 states in the US, but we also have operations in Germany, Mexico, Brazil, Puerto Rico and the United Kingdom. In fact, we are the number one prestige auto retailer in the United Kingdom. When I say prestige vehicles, that's really the premium or luxury side of the business. We currently sell 41 vehicle brands, and we operate 31 collision repair shops on a worldwide basis. When you look at our dealerships and our service and parts operation, because we also repair vehicles, we service over 2 million vehicles per year, and we have 14,000 employees on a worldwide basis. We represent all the significant brands. Our company definitely has a foreign name plate or a premium and luxury brand focus with 82% of our revenues coming from the foreign and luxury name plates and 18% coming from the US domestic name plates, which would be GM, Ford and Chrysler.
TWST: In the industry we see low-finance costs, the incentive programs
and hear about too much production from the manufacturers themselves.
How does that play into the resale market and incentives? How does that
impact your strategies and goals?
Mr. Pordon: There are a couple of things to talk about on that. You've
hit on a couple of good key items, but the industry itself is very
competitive as you can imagine. The thing about the retail automotive
business is that we are what we call the downstream end of the business.
We don't have any engineering; we do not have any manufacturing. We buy
the new vehicles from the manufacturers and the OEMs, and we sell the 41
brands I mentioned previously of cars and trucks to the retail customer.
Then we provide repairs and maintenance services at all of our
dealership locations. In fact, in the industry where you do have perhaps
some over capacity or too much inventory, the retail customer can really
benefit. The automotive OEMs usually provide incentives or low-rate
financing or lease incentives to entice the customer to come into that
dealership and to purchase a vehicle. So those incentives are really
good things. We take those, and we pass them on to the customers. That's
really an incentive that comes from the OEM through our hands right to
the customer to help buy a vehicle. The industry itself is, as I
mentioned, highly competitive; it is only 6%-7% consolidated. By that I
mean the top players in the industry themselves, from a retail
automotive standpoint, only have about 6%-7% of the total car sales in
the United States today. There are really 22,000 dealers and 43,000
franchises in the US. So you can see that the competition out there is
quite large, and the competition is really at the local level with the
local dealer we are competing with on a day-to-day basis. So it's a very
competitive industry and one that can be very good because you have four
separate lines to your business. In your dealership you have the new car
and the used car sales side. You also have the service and repair
business where you have to service some parts. You service the vehicles
when something goes wrong, you have the warranty and extended warranty
work and then, of course, you have the finance transaction.We help our
guests obtain competitive financing on their purchase or lease. The
diversity of our model really helps us at the retail level to weather
any ups and downs that the business may feel.
Tickers included in this excerpt: UAG
TWST Newsletter
For more information call (212) 952 7433. The Wall Street Transcript does not endorse any of the comments made by interviewees, and does not make stock recommendations.