10 Best Auto and Truck Dealership Stocks to Invest In

4. Group 1 Automotive, Inc. (NYSE:GPI)

Number of Hedge Fund Holders: 40

Group 1 Automotive, Inc. (NYSE:GPI) ranks 4th on our list of best auto and truck dealership stocks to invest in. It operates as an international car retailer, primarily in the United States and the United Kingdom. The company owns about 260 dealerships and 338 franchises and also operates an omnichannel platform called AcceleRide.

Conventum – Alluvium Global Fund in its Q3 2024 investor letter mentioned that Group 1 Automotive, Inc. (NYSE:GPI) has proved to be resilient within a challenging market characterized by CDK outage and the hurricane. Management has been busy growing its dealership network in the UK and the United States. On August 1, it announced the acquisition of Inchcape’s retail operations, adding 54 dealerships which will generate an estimated $2.7 billion in annual revenue. In addition, the company also acquired four Mercedes-Benz dealerships, expected to contribute around $105 million in revenue, and a large BMW store in Lincoln, projected to add approximately $125 million.

During the fiscal third quarter of 2024, Group 1 Automotive, Inc. (NYSE:GPI) generated an all-time quarterly high of $5.2 billion in revenue, indicating an 11% increase year-over-year. Revenue growth was driven by a record 53,775 new vehicle units sold during the quarter, representing an 18.6% increase year-over-year. Management remains confident regarding its prospects due to its growing footprint in both the US and UK markets.

Conventum – Alluvium Global Fund stated the following regarding Group 1 Automotive, Inc. (NYSE:GPI) in its Q3 2024 investor letter:

“Group 1 Automotive, Inc. (NYSE:GPI) was up 29.0%. Its second quarter results appeared to be above market expectations. We mentioned in our last report that US car dealers were heavily affected by the CDK software outage, but it seems Group 1 fared better than most. And now, with the 54 Inchcape dealership acquisition about to close (which will double its UK size and add USD 2.7b to revenue), we have updated our analysis. The result? Well despite becoming a larger entity with an expected 25% increase in revenue and 30% increase in earnings, there is negligible change to our valuation. Notwithstanding, we have no reason to doubt management’s confidence in the merits of the transaction. The numbers do not always tell the full story (or even part of it), and to us it makes sense to build scale in the UK. After the price gain, the business now trades at a small premium to our valuation. Not enough, in our view, to warrant major selling but when it reached 5.0% of the Fund we sold a little (to end the quarter at 4.2%) and we increased our position in Autonation (up 12.3%) which we consider slightly cheaper.”