After some tumultuous activity, the Kerrigan Index settled down for the month of June. The index was up five percent that month, which means a year over year decrease of eight percent. However, most of the lost ground for March is steadily being made up for. Today, Bridget Fitzpatrick and Ryan Kerrigan, Managing Director of Kerrigan Advisors, discuss these and many other key data insights as they present the Kerrigan Advisors Market Update.
According to Ryan, the S&P 500 Index is doing a little better. Year over year, the S&P is down only four percent. This is due in part to the perceived economic sensitivity since vehicles are often a very large purchase for consumers. With that being said, many dealers are reporting strong, even record numbers for May and June. This strong demand for vehicles is actually causing some inventory shortages due to plant closures. Imports are currently set up to deal with this sharp increase in demand, but some of the domestic brands are finding it more difficult.
This means dealers are doubling on used vehicles even going so far as to report 2:1 used to new sales ratios. Now, dealers are making their profits on gross, not volume. Interestingly, the Kerrigan Advisors have not seen a big change in Blue Sky values. While the pandemic certainly ushered in a new set of challenges, it also highlighted how flexible the dealership model really is.
As for valuations, Kerrigan Advisors is categorizing the pandemic as a one-time event. In Ryan’s words, the past few months are not an accurate indicator of where the business is going.
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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