The automotive buy-sell market has remained surprisingly resilient despite the economic uncertainties surrounding tariffs, vehicle production, and fluctuating vehicle prices. On the latest episode of CBT Now, we’re joined by Todd Berko, co-managing partner at Bel Air Partners, who shares insights into the factors driving deals in today’s market and why long-term success in the industry remains unchanged. Berko outlines why dealership valuations remain strong and why buyers are still eager to invest despite temporary market distortions.
To begin today’s discussion, Berko dives into the current state of dealership valuations and how ongoing economic factors are impacting them. He explains that the primary driver of dealerships being put up for sale is not the current market uncertainty, but rather aging owners without succession plans. Additionally, Berko emphasizes that while the ongoing trade tensions and tariffs have created noise, they do not fundamentally alter the long-term value of car dealerships, which are still seen as stable, long-term assets.
According to Berko, buyers in today’s market recognize that dealerships provide a unique level of control, unlike stock market investments, which may feel riskier due to their volatility. He highlights that car dealerships are an essential part of a broader, long-term business plan, and as such, buyers are still interested in acquiring them, even if current market conditions are less than ideal.
A significant shift in the industry, as Berko points out, is the trend of larger dealership groups becoming more profitable. Through the use of technology, these groups have been able to streamline operations, reduce costs, and thus outcompete smaller players in the market. Berko also suggests that the current political and economic landscape, including the tariff debate and production adjustments, may lead to permanent changes. However, these effects are still too uncertain to fully predict.
On the topic of dealership pricing, Berko believes that while there is pressure from current market distortions, pricing remains strong. He explains that dealerships are not desperate to sell and are willing to pull properties off the market if the offers don’t meet expectations. This gives buyers little room to wait too long, as good deals might not be available for years.
Finally, Berko discusses the hottest real estate markets for dealership investment, with Florida, Texas, and Nevada standing out due to their growing populations, lack of income taxes, and expanding infrastructure. He notes that these regions continue to attract high-value deals, where larger dealerships offer more opportunity for operational efficiency and higher returns.
“Also, buyers recognize that there's a lot of noise going on, and the real talent in business is knowing what's noise and what's reality, and dealers have a view on that..."– Todd Berko
