We’re now in the final stretch of 2024, and the automotive industry continues to face a number of significant shifts and challenges. From the port strikes to the latest news around Stellantis and Volkswagen, there’s a lot to unpack. Here to help us break it all down and give us a look at what’s ahead for the buy/sell market is Ryan Kerrigan, Managing Director of Kerrigan Advisors, on the latest episode of Inside Automotive.
1. While the industry does not show significant underlying growth, the current sales environment remains strong and consistent with profitability. Although 2024 is tougher than previous years, the market is still performing better than pre-COVID levels.
2. The ongoing port strikes, involving 45,000 longshoremen at 36 ports, are impacting the automotive supply chain. These ports handle 34% of automotive and parts imports into the U.S., and the disruption could lead to inflationary pressures, affecting the overall economy and the industry.
3. Recent interest rate reductions by the Federal Reserve have yet to significantly impact the automotive market. However, these reductions are expected to influence the industry over time, positively affecting consumers’ financing and dealership operations.
4. The Biden administration recently imposed a 100% tariff on Chinese EVs and substantial tariffs on auto parts and semiconductors. While Chinese cars are not yet prominent in the U.S. market, China is rapidly increasing its global automotive exports, with projections to surpass six million vehicles in 2024.
5. Stellantis dealers continue to struggle due to excessive and outdated inventory, high average selling prices, and slow executive response from the European-based parent company. The situation is exacerbated by leadership turnover and an apparent disconnect between Stellantis’ North American market and its European leadership.
"Dealers are generally in a much better position today compared to 2019. As we move towards the new normal, many groups have larger organizations with higher revenue and more cash on their balance sheets due to the COVID era." — Ryan Kerrigan
Kerrigan Advisors is the leading sell-side advisor and thought partner to auto dealers nationwide. Since its founding in 2014, the firm has led the industry with the sale of over 280 dealerships representing $9 billion in client proceeds, including the third largest transaction in auto retail history – the sale of Jim Koons Automotive Companies to Asbury Automotive Group. The firm advises the industry’s leading dealership groups, enhancing value through the lifecycle of growing, operating and, when the time is right, selling their businesses. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, Kerrigan Advisors does not take listings, rather they develop a customized sales approach for each client to achieve their personal and financial goals. In addition to the firm’s sell-side advisory services, Kerrigan Advisors also provides a suite of consulting and investor services including growth strategy, market valuation assessments, capital allocation, transactional due diligence, open point proposals, operational improvement and real estate due diligence.
Kerrigan Advisors monitors conditions in the buy/sell market and publishes an in-depth analysis each quarter in The Blue Sky Report®, which includes Kerrigan Advisors’ signature blue sky charts, multiples, and analysis for each franchise in the luxury and non-luxury segments. To download a preview of the report, click here. The firm also releases monthly The Kerrigan Index™ composed of the seven publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail. To access The Kerrigan Index™, click here. To read the 2023 Kerrigan Dealer Survey, click here. To read the 2024 Kerrigan OEM Survey, click here. Kerrigan Advisors also is the co-author of NADA’s Guide to Buying and Selling a Dealership.
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