Erin Kerrigan, Managing Director of Kerrigan Advisors, joins CBT News to discuss July’s Kerrigan Index and the marketplace’s reaction.
The Kerrigan Index™ is composed of the seven publicly traded auto retail companies with operations focused on the US market, including CarMax, AutoNation, Penske Automotive Group, Lithia Motors, Group 1 Automotive, Asbury Automotive Group, Sonic Automotive.
The Kerrigan Index did well through the month of July and was up over 3.8 percent. These results keep steadily in line with the S&P and is up over 5% for the year. Even though there has been much talk about disruption to the industry due to different contributing factors, we are not seeing that. Leading companies within the industry continue to rise.
Erin explains that these results could be due to Wall Street’s efforts to consolidate. She says, “We think this is Wall Street’s way of saying there is clearly more consolidation in auto retail and that the largest companies in our industry will disproportionately benefit from consolidation, both through economy of scale and of course through economy of scope.”
Dealerships have found various ways to maintain success through disruption by changing their business models and adjusting as needed. Many are doing so by developing and investing in technology. This allows a dealer to continue to grow earnings amidst selling lows.
It was a successful month for a few of the leading companies in automotive during the month of July. On average, earnings were up 28%. Much of that number was not driven by new vehicle sales. Instead, there has been a strong showing among used car sales and service. It was reported this month that service picked up and had a leading hand in the July’s success with F&I gross per vehicle improving as well.
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 275 dealerships representing nearly $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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