Going into 2021 and despite the pandemic, a greater share of auto dealers expect the value of their franchises to increase in the next 12 months, according to a dealer survey from Kerrigan Advisors.
In addition, dealers responding to the survey and dealership brokers in interviews say they expect heavy traffic in buy-sell agreements in the coming year, after a high-volume year in 2020, as well.
“The results of the survey found that dealers remain largely optimistic about the valuation of their dealerships over the next 12 months, despite the economic turmoil associated with COVID-19,” according to the 2020 Kerrigan Dealer Survey report, published Nov. 24.
The survey found 33% of 680 dealer respondents expect the value of their dealerships to increase, up from 26% a year ago.
Another 53% of respondents say they expect their dealerships to remain the same in value, vs. 60% a year ago. And 14% say they expect a decrease in valuation, the same as last year.
Erin Kerrigan, founder and managing director of Kerrigan Advisors in Irvine, CA, says the leading brands dealers expect to gain value in the next 12 months are Subaru, Toyota, Porsche, Honda and Mercedes-Benz. Those survey results range from 38% of all respondents who name Subaru, to 26% who name Mercedes-Benz.
All respondents chose from among all brands, not just a brand’s own dealers, Kerrigan says.
At the other end of the survey, the five brands dealers most commonly expect to lose value in the next 12 months are Nissan, Infiniti, Acura, Cadillac and Buick-GMC.
Those range from 69% of respondents for Nissan, to 40% for Buick-GMC, the survey says.
In an earlier phone interview, Kerrigan says the buy-sell market for dealerships is “as active as I’ve ever seen it. Buyers are getting very aggressive in their growth plans. I think it’s because we are making so much money, especially existing dealers.”
Going into 2021 and despite the pandemic, a greater share of auto dealers expect the value of their franchises to increase in the next 12 months, according to a dealer survey from Kerrigan Advisors.
In addition, dealers responding to the survey and dealership brokers in interviews say they expect heavy traffic in buy-sell agreements in the coming year, after a high-volume year in 2020, as well.
“The results of the survey found that dealers remain largely optimistic about the valuation of their dealerships over the next 12 months, despite the economic turmoil associated with COVID-19,” according to the 2020 Kerrigan Dealer Survey report, published Nov. 24.
The survey found 33% of 680 dealer respondents expect the value of their dealerships to increase, up from 26% a year ago.
Another 53% of respondents say they expect their dealerships to remain the same in value, vs. 60% a year ago. And 14% say they expect a decrease in valuation, the same as last year.
Erin Kerrigan, founder and managing director of Kerrigan Advisors in Irvine, CA, says the leading brands dealers expect to gain value in the next 12 months are Subaru, Toyota, Porsche, Honda and Mercedes-Benz. Those survey results range from 38% of all respondents who name Subaru, to 26% who name Mercedes-Benz.
All respondents chose from among all brands, not just a brand’s own dealers, Kerrigan says.
At the other end of the survey, the five brands dealers most commonly expect to lose value in the next 12 months are Nissan, Infiniti, Acura, Cadillac and Buick-GMC.
Those range from 69% of respondents for Nissan, to 40% for Buick-GMC, the survey says.
In an earlier phone interview, Kerrigan says the buy-sell market for dealerships is “as active as I’ve ever seen it. Buyers are getting very aggressive in their growth plans. I think it’s because we are making so much money, especially existing dealers.”
Separately, a couple of her competitors express similar opinions. Alan Haig, president of Haig Partners in Fort Lauderdale, FL, points out in a phone interview that Lithia Motors alone announced plans in July 2020 to add $20 billion-plus in revenues from mergers and acquisitions in the next five years.
Meanwhile George Karolis, president of the Presidio Group in Duluth, GA, says in a phone interview the pace of mergers and acquisitions has not let up in 2020. “If anything, I think that the pace has accelerated. Dealers are doing real well,” he says. “Margins are back to pre-COVID levels, but expenses are not.”
Kerrigan Advisors is the leading exclusive 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 auto 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. Kerrigan Advisors 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, consulting, accounting, finance and real estate, we not take listings nor do we employ a brokerage model; rather we 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 automobile dealership 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®, the industry authority on dealership buy/sell market trends and valuations and 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 The Kerrigan Index™ comprised 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 2024 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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