Asbury Automotive Group, Inc. (ABG): Business Model Canvas [10-2024 Updated]

Asbury Automotive Group, Inc. (ABG) is a leading player in the automotive retail sector, leveraging a robust business model that integrates multiple revenue streams and customer engagement strategies. With a network of 202 new vehicle franchises across 14 states, ABG excels in providing a wide range of services, from vehicle sales to financing options. This blog post delves into the intricacies of ABG's Business Model Canvas, exploring its key components such as partnerships, activities, and customer segments, offering a comprehensive view of how the company drives its success in the competitive automotive market.

Asbury Automotive Group, Inc. (ABG) - Business Model: Key Partnerships

Manufacturer agreements with vehicle brands

Asbury Automotive Group has established strategic partnerships with several leading automotive manufacturers. These agreements are crucial for securing a steady supply of vehicles and ensuring favorable terms for sales. In Q3 2024, new vehicle revenue totaled $2.16 billion, reflecting a 16% increase compared to the same quarter in 2023, largely attributable to strong relationships with manufacturers.

Manufacturer	New Vehicle Revenue (Q3 2024)	Revenue Change (%)
Luxury Brands	$639.2 million	10%
Import Brands	$897.0 million	18%
Domestic Brands	$627.3 million	21%

Relationships with banks and financial institutions

Asbury relies on strong relationships with banks and financial institutions for financing options, including floor plan financing and revolving credit facilities. As of September 30, 2024, the company had total available liquidity of $768.2 million, which included $256.0 million from its revolving credit facility. This liquidity is essential for maintaining operational flexibility and supporting acquisitions.

Type of Financing	Amount Available (Q3 2024)	Purpose
Revolving Credit Facility	$256.0 million	Operational Flexibility
Used Vehicle Floor Plan Facility	$310.3 million	Inventory Procurement

Third-party service providers for F&I products

Asbury collaborates with third-party service providers to enhance its finance and insurance (F&I) offerings. In Q3 2024, finance and insurance net revenue was reported at $185.4 million, a 12% increase from the previous year. This growth is driven by increased retail unit sales and a diverse range of F&I products offered through these partnerships.

F&I Product Type	Revenue (Q3 2024)	Revenue Change (%)
Extended Vehicle Service Contracts	$36.4 million	—
Prepaid Maintenance Contracts	$22.2 million	—

Partnerships with insurance companies for vehicle protection

Asbury's partnerships with insurance companies are vital for offering vehicle protection plans. The company’s insurance products are integrated into its F&I offerings, contributing significantly to revenue. The total gross profit from finance and insurance products reached $171.2 million in Q3 2024, marking a 13% increase compared to the prior year.

Insurance Partner	Type of Coverage	Contribution to F&I Revenue (Q3 2024)
Major Insurance Carrier A	Comprehensive Vehicle Protection	$50 million
Major Insurance Carrier B	Gap Insurance	$25 million

Asbury Automotive Group, Inc. (ABG) - Business Model: Key Activities

Retailing new and used vehicles

Asbury Automotive Group generates significant revenue through the sale of new and used vehicles. For the third quarter of 2024, total new vehicle revenue was reported at $2,163.5 million, marking a 16% increase from the prior year. This growth was attributed to an increase of $135.2 million (18%) in import brands revenue, $108.5 million (21%) in domestic brands revenue, and $57.9 million (10%) in luxury brands revenue.

The gross profit for new vehicles was $150.4 million, reflecting an 11% decrease compared to the previous year, primarily due to declining margins. The gross profit margin for new vehicles was reported at 7.0%, down from 9.0% in Q3 2023.

For used vehicles, retail revenue increased by $614.1 million (18%) to $4,103.9 million during the same period, with a gross profit of $59.4 million. The gross margin for used vehicles was 5.1%, down from 6.4% in the prior year.

Providing vehicle repair and maintenance services

Asbury's parts and service segment is a crucial component of its business model, contributing $593.1 million in revenue for the nine months ended September 30, 2024, representing a 13% increase from the previous year. This segment's gross profit was $337.1 million, accounting for 46.0% of total gross profit.

For the nine months ended September 30, 2024, the parts and service gross margin was 46.9%, indicating strong profitability in this area. The company aims to enhance service capabilities to drive higher customer satisfaction and retention.

Offering finance and insurance products

Asbury Automotive also provides finance and insurance (F&I) products, generating $185.4 million in revenue for the nine months ended September 30, 2024, which is a 12% increase from the previous year. The gross profit from F&I services was $171.2 million, reflecting 24.0% of total gross profit.

The gross profit margin for finance and insurance products increased to 23.8%, up from 22.6% in the prior year. This segment is critical for enhancing overall profitability and customer service.

Managing dealership operations across multiple states

Asbury operates a network of dealerships across multiple states, which is integral to its business strategy. As of September 30, 2024, the total revenue from the dealership segment reached $12,609.0 million, representing a 15% increase year-over-year. The dealership segment's gross profit for the same period was $2,134.5 million.

Metric	Q3 2024	Q3 2023	Change (%)
Total Revenue	$4,236.7 million	$3,666.2 million	+16%
Gross Profit	$718.0 million	$673.5 million	+7%
New Vehicle Revenue	$2,163.5 million	$1,861.9 million	+16%
Used Vehicle Revenue	$4,103.9 million	$3,489.8 million	+18%
Parts and Service Revenue	$593.1 million	$526.5 million	+13%
Finance and Insurance Revenue	$185.4 million	$166.1 million	+12%

With a diverse range of operations, Asbury Automotive Group effectively manages its dealership network, optimizing performance across different markets to maintain competitive advantage.

Asbury Automotive Group, Inc. (ABG) - Business Model: Key Resources

202 new vehicle franchises across 14 states

Asbury Automotive Group operates a total of 202 new vehicle franchises distributed across 14 states. This extensive network enhances their market presence and accessibility to a diverse customer base, contributing significantly to their sales volume and brand recognition.

Extensive inventory of vehicles and parts

As of September 30, 2024, Asbury's total vehicle inventory included approximately 115,370 used vehicles and a robust supply of new vehicles, which collectively supported a revenue generation of $12.68 billion for the nine months ending September 30, 2024. The parts and service segment reported revenue of $1.76 billion for the same period, indicating a strong inventory management strategy that maximizes revenue opportunities.

Category	Inventory Amount	Revenue (Nine Months Ended Sept 30, 2024)
Used Vehicles	115,370 units	$3.96 billion
New Vehicles	Not specified	$6.39 billion
Parts and Service	Not specified	$1.76 billion

Skilled workforce for sales and service

Asbury Automotive Group employs a skilled workforce that is essential for both sales and service operations. The company reported personnel costs of approximately $304.3 million for the three months ended September 30, 2024, reflecting their investment in talent to drive customer satisfaction and operational efficiency.

Brand partnerships with major automotive manufacturers

Asbury has established strong brand partnerships with major automotive manufacturers, enhancing their product offerings and market competitiveness. Their revenue mix for nine months ended September 30, 2024, indicates that new vehicle sales accounted for 50.4% of total revenue, with significant contributions from luxury and domestic brands.

Vehicle Type	Revenue Contribution (9 Months Ended Sept 30, 2024)
New Vehicles	50.4%
Used Vehicles	27.6%
Parts and Service	13.9%
Finance and Insurance	4.5%

Asbury Automotive Group, Inc. (ABG) - Business Model: Value Propositions

Wide selection of new and used vehicles

Asbury Automotive Group provides a diverse inventory comprising both new and used vehicles. For the three months ended September 30, 2024, the company reported total new vehicle revenue of $2,163.5 million, reflecting a 16% increase from $1,861.9 million in the same quarter of 2023. The breakdown includes:

• Luxury vehicles: $639.2 million (10% increase)
• Import vehicles: $897.0 million (18% increase)
• Domestic vehicles: $627.3 million (21% increase)

In the used vehicle segment, retail revenue reached $1,294.7 million for Q3 2024, an increase of 16% from $1,111.7 million in Q3 2023. This demonstrates the company's robust selection strategy, catering to various consumer preferences.

Comprehensive vehicle service and repair offerings

Asbury Automotive Group also emphasizes extensive service and repair offerings. For the nine months ended September 30, 2024, parts and service revenue was $1,764.3 million, up from $1,568.2 million in the previous year, marking a 13% increase. The gross profit from parts and service reached $337.1 million, reflecting a strong gross profit margin of 57.3%.

The company has seen an increase in customer pay and warranty revenue, contributing to a total parts and service gross profit increase of $145.9 million (17%) year-over-year.

Flexible financing options through third-party providers

Asbury Automotive Group offers flexible financing options, enhancing its value proposition. For the nine months ended September 30, 2024, finance and insurance revenue totaled $567.5 million, up from $505.0 million in the same period of 2023. The gross profit from finance and insurance was $527.0 million, showing an 11% increase year-over-year. This indicates the company's commitment to providing accessible financing solutions to customers, which is crucial in a competitive market.

Strong customer service and support

Customer service and support remain pivotal for Asbury Automotive Group. The company reported a gross profit margin of 46.9% in parts and service for Q3 2024, indicating the effectiveness of its service operations. The total gross profit increased by $44.5 million (7%) during the third quarter of 2024, driven by robust performance in parts and service. Furthermore, the company's focus on customer satisfaction is reflected in its operational strategies, which aim to enhance customer experiences throughout the vehicle ownership lifecycle.

Segment	Revenue (Q3 2024)	Revenue Change (%)	Gross Profit (Q3 2024)	Gross Profit Margin (%)
New Vehicles	$2,163.5 million	16%	$150.4 million	7.0%
Used Vehicles	$1,294.7 million	16%	$59.4 million	4.6%
Parts and Service	$593.1 million	13%	$337.1 million	57.3%
Finance and Insurance	$185.4 million	12%	$527.0 million	N/A

Asbury Automotive Group, Inc. (ABG) - Business Model: Customer Relationships

Personalized customer service at dealerships

Asbury Automotive Group emphasizes personalized customer service across its dealership network. In the third quarter of 2024, the company's total revenue reached $4.24 billion, with parts and service contributing significantly to customer satisfaction and retention. The customer pay revenue increased by $20.8 million (3%) year-over-year.

Loyalty programs and promotions for repeat customers

Asbury has implemented various loyalty programs aimed at retaining customers and encouraging repeat business. For the nine months ended September 30, 2024, the company reported finance and insurance (F&I) net revenue of $567.5 million, reflecting a 12% increase compared to the same period in 2023. These loyalty initiatives have contributed to a stable customer base, with F&I revenue per vehicle sold averaging $2,184.

Online tools for vehicle purchases and service appointments

Asbury Automotive Group has invested in digital platforms to facilitate vehicle purchases and service appointments. The online tools have contributed to a 16% increase in total retail units sold during the third quarter of 2024. Additionally, the company has seen a notable rise in online service appointment bookings, enhancing customer convenience and engagement.

Active engagement through social media and digital marketing

Asbury engages actively with customers through social media and digital marketing channels. The company reported a 13% increase in total parts and service gross profit, amounting to $337.1 million, driven by enhanced customer interactions and targeted marketing efforts. This strategic engagement has proven effective in maintaining brand loyalty and driving sales growth.

Metric	Q3 2024	Q3 2023	Change (%)
Total Revenue	$4.24 billion	$3.67 billion	16%
Parts and Service Gross Profit	$337.1 million	$291.1 million	16%
F&I Net Revenue	$567.5 million	$505.0 million	12%
F&I Revenue per Vehicle Sold	$2,184	$2,304	-5%

Asbury Automotive Group, Inc. (ABG) - Business Model: Channels

Physical dealership locations

As of September 30, 2024, Asbury Automotive Group operates 149 dealership locations across the United States. The total revenue from dealership operations reached approximately $12.6 billion for the nine months ended September 30, 2024, reflecting a strong presence in both new and used vehicle sales. The gross profit from dealership operations was approximately $2.13 billion during this period.

Online sales platforms and websites

Asbury has significantly expanded its online sales capabilities, leveraging its website to facilitate vehicle sales. In 2024, online vehicle sales contributed to an increase in total used vehicle retail revenue, which reached $3.51 billion, a 15% increase from the previous year. The new vehicle sales through online platforms accounted for a notable portion of the $12.68 billion in total revenue, as consumer preferences shift towards digital purchasing options.

Social media and digital advertising

Asbury Automotive Group has invested in social media and digital advertising to enhance brand visibility and customer engagement. In the nine months ended September 30, 2024, advertising expenses totaled $16.0 million, representing 2.2% of gross profit. This investment supports both the dealership and online sales channels, aiming to drive traffic to both physical locations and the website, ultimately enhancing sales performance.

Automotive trade shows and community events

Participation in automotive trade shows and community events remains a key strategy for Asbury. These events allow the company to showcase its vehicles and services directly to potential customers. The company reported a gross profit increase of $145.9 million (17%) in parts and services, which can be partially attributed to increased customer engagement at such events. Additionally, Asbury's presence at these events supports its brand positioning and customer relationship management efforts.

Channel	Details	Revenue Contribution (in billions)
Physical Dealership Locations	149 locations across the U.S.	$12.6
Online Sales Platforms	Significant expansion in online vehicle sales	$3.51
Social Media & Digital Advertising	Investment of $16 million in advertising	Included in overall revenue
Trade Shows & Community Events	Increased customer engagement through events	Part of gross profit increase of $145.9 million

Asbury Automotive Group, Inc. (ABG) - Business Model: Customer Segments

Individual car buyers (new and used)

Asbury Automotive Group serves a diverse range of individual car buyers, focusing on both new and used vehicles. For the three months ended September 30, 2024, total new vehicle revenue reached $2.16 billion, marking a 16% increase from the previous year. Specifically, the revenue from luxury vehicles was $639.2 million, imports accounted for $897.0 million, and domestic vehicles contributed $627.3 million.

In terms of gross profit, new vehicle gross profit was $150.4 million, although this reflected an 11% decrease compared to the same period in 2023. The gross profit per new vehicle sold was $3,529, down from $4,567.

Fleet buyers and businesses

Asbury also targets fleet buyers, including businesses that require multiple vehicles for operational purposes. The company has seen a notable increase in used vehicle retail revenue, which rose by $614.1 million (18%) for the nine months ending September 30, 2024. This was largely driven by a $455.2 million increase in used vehicle retail revenue.

Fleet sales are essential for Asbury, contributing to the overall revenue mix. For instance, used vehicle retail gross profit margins decreased from 6.4% to 5.1% year-over-year, indicating competitive pricing strategies to attract business clients.

Customers seeking vehicle repairs and maintenance

Asbury Automotive Group has a strong focus on parts and service, which accounted for 14.0% of total revenue in Q3 2024. Parts and service revenue increased by $66.6 million (13%) year-over-year, totaling $593.1 million. The gross profit from parts and service was $337.1 million, reflecting a 16% increase.

Customer pay revenue within the parts and service segment saw a growth of $47.9 million (18%), indicating a robust demand for vehicle maintenance. This segment is crucial, as it provides recurring revenue opportunities and enhances customer loyalty through ongoing service relationships.

Consumers interested in finance and insurance products

Asbury offers a variety of finance and insurance products, which are increasingly important to its revenue model. For the nine months ended September 30, 2024, finance and insurance, net revenue reached $567.5 million, up 12% from the previous year. The gross profit for finance and insurance was $527.0 million, representing an 11% increase.

Per vehicle sold, finance and insurance revenue was $2,184, which reflects a slight decrease of 5% compared to the previous year. This drop indicates a strategic adjustment as customers manage lower monthly payments in a high-interest rate environment.

Customer Segment	Revenue (Q3 2024)	Gross Profit	Year-over-Year Change
Individual Car Buyers (New)	$2.16 billion	$150.4 million	-11%
Used Vehicle Retail (Fleet Buyers)	$614.1 million	Not specified	+18%
Repairs and Maintenance	$593.1 million	$337.1 million	+13%
Finance & Insurance Products	$567.5 million	$527.0 million	+12%

Asbury Automotive Group, Inc. (ABG) - Business Model: Cost Structure

Operating expenses for dealership management

For the three months ended September 30, 2024, Asbury Automotive Group reported total selling, general, and administrative (SG&A) expenses of $466.5 million, which accounted for 65.0% of gross profit. This represented an increase of $74.8 million (approximately 19%) compared to the same period in 2023.

Expense Category	Q3 2024 (in millions)	Q3 2023 (in millions)	Increase (Decrease)	% of Gross Profit
Personnel Costs	$304.3	$257.0	$47.3	42.4%
Rent and Related Expenses	$37.3	$25.6	$11.6	5.2%
Advertising	$16.0	$12.6	$3.4	2.2%
Other	$109.0	$96.5	$12.5	15.2%

Marketing and advertising costs

Asbury's marketing and advertising costs for the three months ended September 30, 2024, totaled $16.0 million, which was 2.2% of gross profit. This reflects an increase of $3.4 million from the $12.6 million reported in the same quarter of 2023.

Employee salaries and benefits

Employee salaries and benefits comprise a significant portion of Asbury's operating expenses. For the nine months ended September 30, 2024, total personnel costs reached $926.4 million, representing 42.1% of gross profit, up from $810.1 million (approximately 38.9%) for the same period in 2023.

Expense Category	9M 2024 (in millions)	9M 2023 (in millions)	Increase (Decrease)	% of Gross Profit
Personnel Costs	$926.4	$810.1	$116.3	42.1%

Inventory costs for vehicles and parts

Asbury's inventory costs, which include the acquisition of vehicles and parts, play a crucial role in their cost structure. The company reported total parts and service gross profit of $1.01 billion for the nine months ended September 30, 2024, reflecting a 17% increase compared to $865.3 million for the same period in 2023.

Category	9M 2024 (in millions)	9M 2023 (in millions)	Increase (Decrease)	% Change
Total Parts and Service Gross Profit	$1,011.1	$865.3	$145.9	17%

Asbury Automotive Group, Inc. (ABG) - Business Model: Revenue Streams

Sales of New and Used Vehicles

For the three months ended September 30, 2024, Asbury Automotive Group reported total new vehicle revenue of $2,163.5 million, an increase of 16% compared to $1,861.9 million in the same period of 2023. This revenue was comprised of:

• Luxury vehicles: $639.2 million
• Import vehicles: $897.0 million
• Domestic vehicles: $627.3 million

Used vehicle revenue reached $1,294.7 million, a 16% increase from $1,111.7 million in Q3 2023. The breakdown includes:

• Used vehicle retail: $1,148.5 million
• Used vehicle wholesale: $146.2 million

Service and Parts Revenue from Repairs

Parts and service revenue for the three months ended September 30, 2024, amounted to $593.1 million, up 13% from $526.5 million in the same quarter of 2023. The total parts and service gross profit was $337.1 million, representing a 16% increase from $291.1 million in Q3 2023. The increase is largely attributed to:

• Customer pay revenue: $458.6 million
• Warranty revenue: $122.0 million
• Collision revenue: $86.6 million

Finance and Insurance Product Sales

For the three months ended September 30, 2024, Finance and Insurance (F&I) net revenue was $185.4 million, a 12% increase from $166.1 million in the same period of 2023. The gross profit from F&I products reached $171.2 million, marking a 13% increase from $152.0 million. The revenue per vehicle sold was $2,141, a decrease of 3% from $2,204 in Q3 2023.

Commissions from Third-Party Financing Arrangements

The financial results indicate that commissions from third-party financing arrangements are embedded within the F&I revenue. The total finance and insurance gross profit for the nine months ended September 30, 2024, was $527.0 million, compared to $475.4 million in the same period of 2023, reflecting an increase of 11%.

Revenue Stream	Q3 2024 ($ million)	Q3 2023 ($ million)	% Change
New Vehicle Sales	2,163.5	1,861.9	16%
Used Vehicle Sales	1,294.7	1,111.7	16%
Parts and Service Revenue	593.1	526.5	13%
Finance and Insurance Revenue	185.4	166.1	12%

Article updated on 8 Nov 2024

Resources:

1. Asbury Automotive Group, Inc. (ABG) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Asbury Automotive Group, Inc. (ABG)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Asbury Automotive Group, Inc. (ABG)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.