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Lithia Motors (LAD) Acquires Two New Stores; Shares Rise

Lithia Motors Inc. 's LAD shares gained 1.1% on Oct 15, 2015, after the company announced the acquisition of two new stores. The first store is Crown Chrysler Jeep Dodge Ram Fiat in Concord, CA, which will be renamed as Lithia Chrysler Jeep Dodge Ram Fiat of Concord. The second one is Bennett Motors in Great Falls, MT, which will be called Lithia Subaru Hyundai GMC Buick of Great Falls following the acquisition.

The two stores are expected to boost Lithia Motors' annual revenues by $75 million. The company has complementary operations in both the markets and hence, the buyouts will increase its scale of operations.

Lithia Motors is benefiting from the expansion of its business through acquisitions and store openings. In Aug 2015, the company announced the acquisition of a new store - Acura of Honolulu - in Hawaii. This is the company's fourth store in the state and the only Acura store on the island of Oahu. It is also Lithia Motors' second Honda/Acura store in the market, the other being Island Honda of Maui. The buyout is expected to boost Lithia Motors' annual revenues by around $50 million. It will also help strengthen the company's position in the Hawaii market.

In the same month, Lithia Motors acquired the Bitterroot Ford store located in Missoula, MT. The store, renamed Lithia Ford of Missoula, is estimated to generate annual revenues of $50 million. This is Lithia Motors' first Ford store in the state and is anticipated to complement the existing stores - Missoula CJD and Toyota.

In Jan 2015, Lithia Motors opened a Subaru franchise store in Clearlake, TX. The company expects that this store will add $45 million to its annual revenues. In 2014, Lithia Motors acquired 35 stores and opened 1 franchise. On Oct 1, 2014, the company completed the purchase of DCH Auto Group, which is one of the largest dealer groups in the country. The DCH stores are expected to generate approximately $2.3 billion in annual revenues. The company anticipates that the integration of DCH Auto Group will provide geographic and franchise diversification.

Lithia Motors currently carries a Zacks Rank #2 (Buy). Other well-ranked automobile stocks include AutoNation, Inc. AN , Group 1 Automotive Inc. GPI and Penske Automotive Group, Inc. PAG , all carrying a Zacks Rank #2.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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