At this year’s New York Auto Forum, CBT News anchor Jim Fitzpatrick met with Gabe Robleto, Senior Vice President at Kerrigan Advisors, to discuss the latest trends in the dealership M&A market.
Key Takeaways
1. The dealership M&A market is experiencing robust growth, as evidenced by Kerrigan Advisors’ sales of 34 stores since the start of 2024 and 100 stores in the past 18 months. The growth has been driven by significant earnings accumulated by dealers during the pandemic, which have not been fully spent and are contributing to an increase in investment.
2. The demand for automotive dealerships is particularly high for franchises that show strong sales and a high UIO count, with Toyota and Honda being highlighted for their strong performance in these areas. Luxury brands like Mercedes, Lexus, and BMW also command high blue sky values due to their substantially higher sales per franchise compared to competing luxury brands.
3. Despite changes in gross and net profits due to vehicle availability and other economic factors, the decline in franchise values will be less severe than anticipated, with a drop of only 10% due for 2024. Robleto notes that the M&A market remains a seller’s market with peak valuations for top franchises in high-growth areas.
"We estimate that for 2024, the decline in franchise value is down about 10%. However, for the top franchises in the industry and high growth markets, we're still seeing peak valuations." — Gabe Robleto
