Lithia acquires high-volume Honda store in N.J.

Lithia Motors Inc. bought a high-volume Honda store in Hamilton Township, N.J., from a dealership group that last year was sued by two captive finance companies alleging that the group defaulted on millions of dollars in floorplan loans.

Lithia, the third-largest new-vehicle retailer in the nation, said Tuesday it bought Hamilton Honda this month from auto retail veteran Michael Saporito and former NFL linebacker Jessie Armstead. Hamilton Honda last year generated $160 million in revenue and was ranked No. 23 nationally among Honda stores and was the No. 8 Honda store in the New York metro market.

Lithia CEO Bryan DeBoer said the dealership used to be one of the top 10 Honda stores in the country, and he called it "the dominant" store in central New Jersey. The acquisition, which included real estate, also gives Lithia an additional presence in New Jersey and near eastern Pennsylvania; it now has 183 stores nationally.

DeBoer declined to reveal the purchase price.

Hamilton Honda was profitable, and Lithia seeks to grow the dealership's used-vehicle volume and service-and-parts business.

"The store operated fairly well," DeBoer said. "The main things are the costs that you have when you're a smaller group are higher than what we have. So we'll be able to find some fairly good cost improvements."

Hamilton Honda opened in 2009. The 65,000-square-foot dealership has 42 service bays. The dealership is a past winner of Honda's President's Award.

Saporito will continue to operate the dealership, DeBoer told Automotive News. Saporito and Armstead could not be reached for comment.

DeBoer said Lithia was aware of the lawsuits involving the group.

"We knew that the mother ship of all their stores was this store. So it's the one that allowed them to grow," he told Automotive News. "So we weren't super concerned about those financial conditions, and we worked with their lenders and themselves to clear all the debt."

Lithia also worked with Honda on the deal to clear the store of its debts, DeBoer said.

Saporito, Armstead and another partner in several dealerships, Antonio Pierce, ran into problems in August when they were sued by Nissan Motor Acceptance Corp. and Hyundai Capital America over allegations that stores they owned in Michigan and Pennsylvania had sold hundreds of vehicles but failed to repay floorplan loans. That's known in the industry as being out of trust.

DeBoer said the Nissan Motor Acceptance and Hyundai Capital lawsuits weren't "related to the corporations we bought from."

The sellers had five stores involved in the allegations: All Pro Nissan of Dearborn, in Michigan; All Pro Nissan of Macomb in Clinton Township, Mich.; and Hazleton Nissan, Hazleton Hyundai and Hazleton Kia in Hazle Township, Pa.

Nissan Motor Acceptance and Hyundai Capital each also have filed mortgage foreclosure lawsuits involving Hazleton Nissan, Hazleton Hyundai and Hazleton Kia, which closed last year. The lawsuits are pending in Luzerne County, Pa.

Late last year, the ownership trio sold the two All Pro Nissan stores in Michigan — which had abruptly closed in fall 2018 after lawsuits by Nissan's captive finance arm — to the Alan Jay Automotive Network of Sebring, Fla.

The group is believed to be operating Hazleton Honda in Hazle Township, Pa., and Englewood Cliffs Cadillac in Englewood Cliffs, N.J. DeBoer said Lithia is not interested in buying those stores.

Saporito and Armstead also were awarded an open point and had planned to open a sizable Honda store in Grapevine, Texas.

The dealer license application for Grapevine Honda remains pending, a spokesman for the Texas Department of Motor Vehicles said Tuesday. It was submitted in September 2017.

Lithia, of Medford, Ore., ranks No. 3 on Automotive News' list of the top 150 dealership groups based in the U.S., with retail sales of 184,601 new vehicles in 2018.