Automotive M&A transactions have been extremely active even in the throes of a global pandemic. Lithia Motors has made major headlines as it continues to acquire robust dealership groups across the country. Recently, we spoke to 20-year automotive industry veteran Dave Cantin, CEO of Dave Cantin Group, about the growth of Lithia and the overwhelming strength of the buy/sell market.
Consolidation is here to stay says Cantin. In fact, this a trend that Cantin himself has been predicting pre-COVID-19, and during the outbreak, as well. This is largely due to the strength and resilience of auto dealers. Cantin expresses his pride to be part of such a determined and successful industry.
There is a variety of different reasons why buy/sell activity has been so high in recent months. Many dealers are re-investing their PPP loans into acquiring stores while being able to keep their staff on. Many dealers, who were on the fence about retiring, decided that COVID was the push they needed to sell.
There have already been many acquisitions so far this year, however, Lithia acquiring the Suburban Collection might be the biggest so far. Lithia CEO, Bryan DeBoer, and his executive team have been aggressively growing the company over the last 24 months.
Cantin says, “There’s one name that I’m consistently hearing every day in the automotive industry and that’s Lithia. They’re all over the place. They’re making moves left and right. Hands down, incredible job to them.”
According to Cantin, it comes down to infrastructure and the speed of the acquisition. It’s all about getting to the deal first, finding the most attractive buyer, and working with the seller to provide a seamless process. Right now, the cost of acquisitions is less for a buyer than it normally is. On the other hand, dealers who want to sell, have seen record-breaking profits that facture into the acquisition price. Low-interest rates are another component that triggers a greater sell price. Q2 and Q3 were scary for everyone. However, Q4 was Cantin’s busiest in his entire automotive M&A career. DCG is four to five times busier year-over-year, with 30 deals nationwide.
Be sure to watch our entire interview above, you won’t want to miss it!
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