Dealer David Rosenberg has gone from running a large group to heading a budding giant backed by "hundreds and hundreds of millions of dollars," he said.
Last September, Rosenberg, 55, and his former majority partner, Abrams Capital, sold a majority stake in Prime Motor Group to GPB Capital, a New York asset-management company. He retained a minority stake and remained CEO of Prime.
Now, Prime Motor Group and GPB's Capstone Automotive Group have combined into a new entity called Prime Automotive Group, with Rosenberg as CEO, he told Automotive News.
He heads the 25 dealerships that were in Prime Motor Group and another 40 in which GPB had majority ownership stakes, he said. The stores span nine states: New York, New Jersey, Connecticut, Massachusetts, Maine, New Hampshire, Vermont, Pennsylvania and Texas.
"One of the reasons they invested in Prime Motor Group, my original company, was for our infrastructure," Rosenberg said. "If they were going to have a bigger presence in auto retail, they needed a corporate infrastructure and all that entails -- people, processes."
History of growth
Rosenberg has done unorthodox deals before. In 2006, Prime Motor Group partnered with Abrams Capital in one of the first private-equity investments in a dealership group.
Prime Motor, of Westwood, Mass., ranks No. 66 on Automotive News' list of the top 150 dealership groups based in the U.S., with retail sales of 13,853 new vehicles in 2016. GPB's Capstone Automotive did not participate in the survey by the Automotive News Data Center, which produced that list.
A new ranking will be published with the March 26 issue of Automotive News, based on sales in 2017.
Rosenberg grew up in the car business. His father, Ira Rosenberg, founded Ira Motor Group in Massachusetts. In 2000, the two sold the five-store group to Group 1 Automotive Inc., of Houston. The younger Rosenberg ran Group 1's platform in the region until 2006. Then, Abrams Capital founder David Abrams offered to back a new dealership group.
New York alternative-investment firm GPB manages $1.35 billion in assets. In the last four years, GPB Capital has quietly grown by buying exclusive brand dealerships in small to midsize markets and larger stores or groups in metro areas. On June 27, for example, GPB bought a majority stake in nine Kenny Ross Automotive Group dealerships in Pittsburgh and opened a new Buick-GMC point on Staten Island in New York.
Capstone has annual revenue from auto retail investments of $3.4 billion, including Prime's annual top-line revenue of $1.4 billion, Jeffry Schneider, a strategic adviser to GPB, told Automotive News in a previous interview.
More acquisitions
In the past two months, Rosenberg has hired a CFO, a vice president of corporate development and a vice president of finance and insurance. His newly hired COO is Marty Collins, the former western regional vice president for Group 1 and former president of Gulf States Toyota.
Rosenberg said his newly formed team will devise a strategy to grow Prime Automotive Group through acquisitions and other auto retail investments.
Prime Automotive's buy-sell growth is limited only by factory framework agreements, which may restrict a group's size in a particular market or brand, he said. "Our goal is to grow strategically. We'll go into a market and buy a group and then add individual dealerships to it."
It currently has four buy-sells "under agreement" and is working on five more, he said.
"We want to become as efficient as possible in a market," Rosenberg said. "You save on marketing, advertising. You can share inventory. Anywhere we can realize economies of scale and scope, we will do that."
Beyond dealerships
Prime also wants to grow through "vertical integration" in auto retail, he said.
"So anything that touches the retail car business, we're interested in it," he said. "There are trucking companies, non-manufacturer parts, collision centers and accessories."
That includes offering consumers a subscription plan at Prime's luxury stores in Westwood, Mass. , about 10 miles south of Boston. Prime will offer a smartphone app developed in partnership with Clutch Technologies, of Atlanta, allowing customers to drive Porsche, Audi, Acura and Mercedes-Benz vehicles. He plans to test the service for at least six months, then launch it at the appropriate stores.
You can reach Jamie LaReau at jlareau@crain.com -- Follow Jamie on Twitter: @jlareauan
