Over 600 car dealers responded to the fourth annual Kerrigan Advisors Dealer Survey, and dealer sentiment is mainly positive. 80% of car dealers believe the value of their business will either stay the same or improve over the next year. 20% believe the value will decline over the next year. Joining the show to further discuss changing market expectations is Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors.
According to the survey, dealer profit expectations have softened, with only 75% of car dealers believing their profits will either stay the same or improve over the next year. This is a decline from last year’s survey results, which aligns with the current market conditions.
Despite the overall softening of expectations, car dealers still expect increased profits. This is encouraging news, considering the industry’s challenges in recent months. So many car dealers are still expecting to see increases in profits, which is a positive sign for the industry’s future.
The buy/sell market has been affected by the variability in valuations, which has made transactions trickier. Valuations have been coming in differently, and this has caused some confusion. However, car dealers are still pleased overall with the valuations thus far.
Regarding the winners and losers, Nissan and Infinity had a good year, while the other major brands saw a decrease in value. According to the survey, car dealers think most significant brands will see a reduction in value over the next year. This is surprising news for Ford, who had a 17% increase last year but has now dropped 25%. This shows the unpredictability of the future for Ford and the volatility they have seen in the previous two years.
Kerrigan also noted, “Honda is also surprising us this year with a 19% decrease. The chip pricing has been particularly challenging for Honda dealers, and that is reflected in the valuation expectations.” Some may see that as an opportunity to get into a Honda dealership, but survey participants are leery.
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