Automotive Experts Weigh In
“Auto dealers enjoyed another period of healthy profits in Q3, although conditions continue to soften as retail sales appear to have peaked and dealers are also fighting declining vehicle margins and rising costs. The buy-sell market seems to be tracking the overall health of the auto retail industry. We have seen a small decline in the average value per store as both earnings and blue sky multiples have contracted a bit. The volume of dealerships being purchased and sold is also falling slightly. Buyers are more cautious than in prior years as some are expecting dealership profits to fall, so deals are taking longer to negotiate and close. Luxury brand values have taken a hit over the past year, but other franchises are holding up well. The increase in the number of buyers is supporting dealership values. And while it is too soon to know, buyers may see the results of the recent national election as being positive for our industry.”
Alan Haig, President of Haig Advisors, www.haigpartners.com
“Kerrigan Advisors continues to see transaction sizes rise and multi-dealership groups come to market at an increasing pace, as noted in our prior report….Kerrigan Advisors has identified the following three trends which are expected to affect the industry for the remainder of the year and into the New Year.
- Auto retail’s hedged business model sustains dealership profitability
- Economies of scale and scope drive consolidation
- Foreign interest in US auto retail rise”
Erin Kerrigan is Managing Director of Kerrigan Advisors a leading sell-side advisor for owners of higher value dealerships and dealership groups. www.kerriganadvisors.com