It was a rare occurrence: an Elite of Lexus award-winning dealership, said to have generated past gross revenue of more than $200 million a year, going into bankruptcy.
The long-established Lexus of Englewood in Englewood, N.J. — just across the Hudson River from New York City — went on the auction block in January as part of a Chapter 11 bankruptcy case.
The bankruptcy filing followed a lender lawsuit alleging that the store owner sold millions of dollars worth of vehicles without repaying loans.
With the prime location and the halo surrounding the Lexus brand, the auction attracted plenty of attention — DARCARS Automotive Group in Maryland was the winner. But how did the Lexus store end up in such dire straits?
The complicated tale involves multiple stores, feuding business partners and consumers left in the lurch.
“This was supposed to be a premiere Lexus dealership,” said Nima Ameri, lawyer for Frank Holtham, one of the former owners of the store. “It was a disaster from the beginning.”
Buy-sell expert Sheldon Sandler said it’s highly unusual for a Lexus dealership to go into bankruptcy.
“Not only New Jersey, but anywhere,” said Sandler, CEO of dealership advisory firm Bel Air Partners in Hopewell, N.J.
“Lexus is still a highly coveted franchise,” he said.
Lexus is atop National Automobile Dealers Association survey rankings as the most-liked auto brand by dealers, has among the highest sales throughput of automotive brands and is highly desired by dealership buyers when stores do hit the market.
Steven Agran, the bankruptcy court-appointed chief restructuring officer for Lexus of Englewood, said the auction attracted “considerable” interest. DARCARS agreed to pay $27.3 million for Lexus of Englewood, not including leased property, according to court records. The sale closed Feb. 28.
Renamed DARCARS Lexus of Englewood, it’s the first New Jersey store for DARCARS, ranked No. 42 on Automotive News‘ list of the top 150 dealership groups based in the U.S. John Darvish, CEO of DARCARS, in a statement, expressed excitement “to add over 100 new employees and thousands of customers to our family as we embark on a new chapter for DARCARS Lexus of Englewood.”
DTF Holdings came in second in the bidding.
“Englewood is a terrific market. …They’re one of the larger Lexus stores in the country,” Jonathan Sobel, dealer principal for DTF, a group with about a dozen stores in New York and New Jersey, told Automotive News. “It’s fairly uncommon to have an opportunity to bid on a large Lexus store that’s located in Bergen County.”