The flurry of acquisitions this year follows McGovern Automotive last October acquiring a rare Ferrari-Maserati dealership, buying Ferrari-Maserati Long Island in Plainview, N.Y., from Experience Auto Group.
With all its growth, McGovern said his group is on track to generate $1.8 billion in annual revenue for 2022 and to sell more than 27,000 new and used vehicles combined this year.
McGovern, 52, said that after graduating college, he worked for an accounting firm that specialized in auto dealership work. He said he eventually went to work for a dealership client that was sold to Group 1 Automotive Inc. in 2000. With Group 1, McGovern said he worked as the Northeast region CFO. He left Group 1 and in 2007 co-founded Prime Motor with David Rosenberg and David Abrams of Abrams Capital.
McGovern said he left Prime Motor in early 2016, before Prime in 2017 combined with GPB Capital Holdings’ Capstone Automotive Group to create Prime Automotive Group.
On his own, McGovern said he bought his first store in September 2016, a Chrysler-Dodge-Jeep-Ram store in Newton, Mass., with some financial help from his sister.
“It was a pleasure to shuffle across the street and get rolling on my own with a great, great management team,” McGovern said. “So we quickly bought four dealerships in quarter four of 2016: another Hyundai store, a Honda store, and I was able to buy our Toyota store in December of 2016. And that combination of stores has fueled my growth in terms of extreme profitability right from the get-go.”
In mid-2018, McGovern said he added his first luxury dealerships, buying Audi and BMW in Shrewsbury, Mass., and in June 2020 he added his first Porsche dealership, also on Long Island.
“It was March of 2020, and I put it under agreement,” he recalled. “I was sending out the $500,000 deposit and my CFO said, ‘What? Are you crazy? There’s a pandemic going on.’ And I was like, I’m not crazy. And I think on the other side of this, it’s going to be really, really good.”
The Lundgren store helps McGovern have some efficiencies in western Massachusetts, he said, and follows the strategic acquisition this year of Dillon Chevrolet to help with the group’s new municipal division. McGovern said he aims to sell municipal vehicles such as police and maintenance vehicles “to cities and towns all over Massachusetts, Rhode Island, New Hampshire and as well as possibly the state police in Massachusetts.”
With the Bill Dube Hyundai acquisition, Scott Dube joined McGovern Automotive as vice president of government and industry relations. Dube, who also will continue to serve on the board of directors for the National Automobile Dealers Association, said he retained a minority interest in the dealership, but he did not disclose it.
Dube told Automotive News that he didn’t want to sell his store, but found that “timing’s everything.”
“Interest rates are rapidly increasing, gas prices are rapidly increasing, inflation is rapidly increasing,” he said, adding that those changes put pressure on the family business.
He said it also was a good time for his family to minimize risk exposure given that “there continues to be uncertainty around inventory.”
He said that while low inventory for new vehicles has helped dealers’ profitability, it’s unclear how long that will last.
But McGovern sees at least a few good years ahead for auto retailers.
“We’re going to stay pretty aggressive,” he said of deals that “make sense. I think there’s a solid one to two years at least of really good automotive times. So I think it makes sense to be bullish still.”
Woody Woodward and Brian Brown of DCG Acquisitions, a Dave Cantin Group company, handled the McGovern-Lundgren transaction.