Asbury Automotive Group Wins Court Order Against CDK Global in Landmark Legal Battle
DULUTH, Ga. - Asbury Automotive Group (NYSE: ABG) secures a court order forcing CDK Global (NASDAQ: CDK) to transfer dealership data to Tekion Corp, marking a significant development in the automotive retail and service sector. This move follows a lawsuit filed by Asbury against CDK for withholding data crucial for a pilot program involving four Asbury dealerships. The program aims to explore alternative Dealership Management System (DMS) services, essential for efficient dealership operations.
The court ruling allows Asbury to proceed with the pilot to evaluate Tekion's services, a direct competitor to CDK in the DMS market. Barry Cohen, Asbury's Vice President and Chief Information Officer, lauds the court's decision, highlighting the importance of testing new business products to enhance the customer and staff experience in car buying and servicing.
As a Fortune 500 company headquartered in Duluth, Georgia, Asbury operates 153 new vehicle dealerships across 31 domestic and foreign brands, along with 37 collision repair centers. The recent legal victory underscores Asbury's dedication to innovation and improving customer service.
In other news, Asbury reported record total revenue of $4.2 billion and record parts and service revenue of $581 million, despite a temporary CDK outage. Stephens initiated coverage on Asbury, projecting declines in EBITDA and earnings per share through 2025, with expected growth in 2026 due to a share repurchase program. Additionally, the U.S. Federal Trade Commission (FTC) filed a lawsuit alleging discriminatory pricing practices at three Texas dealerships, which Asbury intends to contest.
InvestingPro Insights reveal Asbury's focus on innovation and operational efficiency, evident in its financial performance. The company's revenue growth stands at 6.9% over the last twelve months, with a 13.46% quarterly growth in Q2 2024. Despite operating with significant debt and weak gross profit margins, Asbury has shown strong returns over the past five years, indicating effective long-term strategies.
For a more comprehensive analysis, InvestingPro offers additional tips and insights on Asbury Automotive Group, providing investors with a deeper understanding of the company's financial health and market position.
In conclusion, Asbury's legal victory against CDK, coupled with its strong financial performance and strategic initiatives, positions the company for continued growth and success in the automotive retail industry. Investors should monitor Asbury's progress and innovation efforts to make informed decisions regarding their investment portfolios.