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Dealership chain eyes Buffalo market with Ray Laks purchase

One of the nation's largest auto dealer groups, with an appetite for acquisition, may soon enter the Buffalo market.

Lithia Motors, a publicly traded dealer group based in Oregon, could purchase Ray Laks Honda Acura, according to a source familiar with the negotiations who asked not to be identified. The sale of the Ray Laks dealerships is expected to be completed in January, the source said, but he did not rule out the possibility of a different purchaser stepping forward.

Ray Laks has a Honda dealership at 3590 Southwestern Blvd., near Route 219 in Orchard Park, and an Acura dealership at 7460 Transit Road in Amherst, across from the Eastern Hills Mall.

Officials with Ray Laks and Lithia did not return messages to comment. If Lithia does enter the market, the company would bring a different dimension to new-vehicle sales. The Buffalo Niagara region is home to prominent, locally based dealer groups, such as West Herr, Towne, Northtown and the Basil family of dealerships, but none of them is publicly traded.

Lithia ranked No. 4 among the nation's 150 largest dealer groups on a list published by Automotive News earlier this year, based on the 145,772 new retail vehicles it sold in 2016. West Herr was No. 22 on the same list, with 29,486 new retail vehicles sold. Lithia also ranked No. 318 on this year's Fortune 500, with $8.7 billion in revenues in 2016.

Lithia has taken an increased interest in the Eastern United States, including New York State. Last September, Lithia bought the Carbone Group, which has stores in Utica and Albany, and has kept the Carbone name on the stores. Carbone ranked No. 94 on Automotive News' list released in 2016.

That purchase provided "a foundation from which Lithia plans to expand its exclusive market strategy throughout the Northeast," said Bryan DeBoer, Lithia's president and CEO, when the deal was announced last year. This week, the Albany Times-Union reported Lithia bought Armory Garage, one of the Capital Region's oldest dealerships.

Last May, Lithia expanded into Pennsylvania, buying a Pittsburgh-based auto group. Lithia now has nearly 170 stores representing 30 brands in 18 states.

Last year, Lithia reported profits of $197 million. In October, Lithia reported third quarter profits of $51.9 million on revenues of $2.7 billion — the highest third quarter revenues in its history.

Frank Downing Jr., president of Towne Automotive Group, said he has heard talk of Lithia coming into the market and said the company would be "great competition. It's just shows public companies believe in Buffalo."

Lawrence Schreiber, a co-owner of Northtown Automotive Group, said he wasn't familiar enough with Lithia to comment on its business. But he said in general, publicly traded auto groups in haven't made a push into Rust Belt or "mature" markets, tending to favor growing Sun Belt markets.

"Buffalo is a very strong local market," Schreiber said.

Ray Laks has had a Honda franchise since 1971; the dealership was formerly in West Seneca. Ray Laks opened an Acura dealership, initially in Orchard Park, in 1986 after Honda created the new division.

This wouldn't be the first time a publicly traded auto dealer group operated in the Buffalo market. Back in 1997, what became known as AutoNation bought Al Maroone Ford in Clarence, as part of a larger deal. But in 2006, AutoNation exited when it sold the dealership to Dave Smith Ford. Florida-based AutoNation remains the No. 1 dealer group in the country measured by retail new vehicle sales.

Some other privately held dealer groups based outside the region have also established a presence in the Buffalo market, such as Fuccillo, Zeigler and Lia.

Another publicly traded company, CarMax, plans to open a used-vehicle superstore in the region. Early this year, the Virginia-based company paid $7.7 million for a Niagara Falls Boulevard property in Amherst that was home to a Holiday Inn. CarMax has not announced an opening date for the store.

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