Retail auto mergers and acquisitions (M&A) are picking up steam in 2024, even as dealership profitability normalizes from pandemic-era highs. According to Haig Partners, Q3 saw 92 rooftops change hands, marking a 10% increase from the previous quarter. Year-to-date, 389 dealerships have been sold, setting 2024 on pace to become the fourth-busiest year for M&A.
Private firms continue to dominate the market, driving 96% of all acquisitions. Publicly traded groups have shifted focus toward optimizing operations rather than expansion, with only four rooftops acquired by public companies in Q3.
Blue sky values, a key metric for dealership worth, have softened from their 2023 peak. The average value for publicly-owned franchised dealerships fell 12% year-over-year to $21.3 million. Brands like Toyota and Honda remain stable, while Mazda has emerged as a standout performer. Mazda’s blue sky multiples rose to 3.5-4.5x earnings, driven by a 25% increase in sales and 55% growth in throughput since 2019.
Dealership profitability, while down 28% year-over-year, remains well above pre-pandemic levels. New vehicle gross profits fell 5.4% in Q3 but are still 30% higher than 2019 averages. Used vehicle and fixed-ops profits continue to show resilience, providing stability amid market normalization.
Looking ahead, dealers are well-positioned to navigate a balanced market. As profitability stabilizes and demand trends evolve, the M&A landscape remains strong, indicating long-term confidence in the retail automotive sector.
