Group 1 Automotive Inc. will keep a focus on growth through acquisition in the U.S. and UK, reports Daryl Kenningham, the incoming president and CEO of the company.
Kenningham will take over as president and CEO following the year-end retirement of CEO Earl Hesterberg, which was announced this week. In an interview with Automotive News, Kenningham noted the dealership group will look for "quality acquisitions" in locations and vehicle brands that align with the company's overall direction.
"We're not going to just chase revenue for the sake of chasing revenue," Kenningham told Automotive News. "We get plenty of acquisition opportunities across our desks that are either in places that we don't feel it's a place we want to be or brands that we feel like we can't make successful long term. So, we are looking for quality."
Kenningham, 58, will begin work executing this strategy as of Jan. 1, when he assumes the CEO role as Hesterberg, 69, officially steps down Dec. 31.
Kenningham joined Group 1 in 2011 as regional vice president before taking on additional responsibilities.
"Now is the perfect time to transition to a new generation of leadership at our company," Hesterberg said in a statement.
"Daryl's performance throughout his career has been exemplary, and he has driven our U.S. business to record levels," Hesterberg said. "Although I will sorely miss the wonderful people at Group 1, this transition will be seamless, and our company could not be in better hands."
Hesterberg came to Group 1 in April 2005 after working at both Ford Motor Co. and Nissan Motor Co.
As CEO, he helped the company expand internationally into the United Kingdom and Brazil. The company now reports 204 dealerships in the U.S. and the U.K. but as since sold its Brazil operations.
When Group 1 added Brazil dealerships in 2001, the company forecasted they would generate around $650 million in annual revenue. But by the end of 2021, the 16 dealerships, representing BMW, Honda, Land Rover and Toyota brands, generated just $315.1 million in revenue.
Hesterberg in February told analysts that "we could never outrun [the exchange rate]. It was two-to-one when we went down there. ... But the exchange rate of two-to-one is now more like five-to-one, and we'd make more profit every year in local currency, and it would translate into less dollars."
Group 1 now looks to the U.S. and U.K. markets for growth.
Kenningham told Automotive News that growth is the top priority for Group 1, following a purchase of 28 dealerships from Prime Automotive Group in 2021. But, he says, Group 1 isn’t interested in developing a nationwide network.
"We don't have an overarching strategy that says we're going to have a digital footprint that allows us to sell a car from a dealership in Atlanta, Ga., to a customer in Seattle, Wash. That's not about who we are," he said.
Kenningham is expected to keep the company on the digital path launched in 2019 with the introduction of AcceleRide. The company reports about 70% of its customers use AcceleRide in their transactions and Kenningham said he expects that percentage to grow. He stressed investing in technology is a "high priority," he said.
David Whiston, U.S. autos equity analyst with Morningstar, noted that promoting a company veteran like Kenningham, brings "continuity on strategy, knowledge of the tool and how it's being integrated into stores."
