2016 Mid-Year Dealership Buy-Sell Report

By July 13, 2016April 24th, 2020No Comments
The Banks Report

July 12, 2016 — Dealership acquisition activity is showing a slight slowdown according to data compiled for TBR’s 2016 Mid-Year Dealership Buy-Sell Report. (Subscribers to The Banks Report can download Excel files with buy-sell activity going back to January 2013). 

Through June of 2016, there were 108 different transactions accounting for 177 rooftops changing hands. In 2015, it was 125 transactions with 241 dealerships being acquired (that includes Berkshire Hathaway Automotive’s 81-store acquisition of the Van Tuyl Group in March 2015).

To download a list of 2016 dealership acquisitions, Click: 2016_Dealer_Buy_Sell_TBR_Jan_June).

Much of the slow down occurred in the second quarter as only 57 dealerships changed hands compared with the 120 that were acquired in the first quarter. The slowdown in the second quarter was similar in 2015 with 87 acquisitions in the first quarter compared with 154 in the first quarter.

The slowdown comes as no surprise as the public dealer groups have dialed back acquisition activity focusing instead returning capital to investors through dividends and share repurchases. Although AutoNation has continued buying stores — a Chrysler store in Colorado in June and the acquisition of four luxury dealerships last week in the Northeast (not included in June’s totals).

  • Group 1 Automotive started the year acquiring the 12-dealership Spire Group in the U.K. The purchase of Spire gives Group 1 Automotive  29 dealerships in the U.K. which should generate approximately $1.8 billion in annual revenue. Spire’s 12 dealerships include four Audi stores, three BMW/MINI dealerships along with an after-sales center; two Seat stores; one each of Jaguar, Skoda and a Volkswagen commercial vehicle dealership.
  • Lithia Motors’ subsidiary DCH Automotive acquired Group 1’s Ira Toyota Scion dealership in Milford, MA. DCH also picked up Riverside Subaru in Riverside, CA.
  • AutoNation, as already mentioned, completed the acquisition of 12 dealerships of the Allen Samuels Group in Texas.

Highlights from the first half of the year include Holman Automotive’s acquisition of the 15-store Kuni Automotive Group, which closed last month. It was the biggest deal since Berkshire’s purchase of Van Tuyl in 2015. AutoNation also closed on the 12-dealership Allen Samuels Group in a deal announced last fall.


Brand Activity

Chrysler-branded dealerships led all acquisitions with 27. Ford was second with 22 while Chevrolet came in third with 21. Luxury brands are still holding there own accounting for 33 different franchises being acquired through June of this year (Audi; BMW; Jaguar; Land Rover; Lexus; Porsche; Mercedes Benz).

Meanwhile, there are some dealers that still see some value in the Volkswagen brand as seven of them changed hands (although, we know that in two of those deals, the Volkswagen franchise was shut down following the purchase). The recent $15.3 billion settlement with regulatory agencies has yet to provide dealers with any real answers as to how the automaker will reimburse them. Furthermore, until a fix is announced, the uncertainty will remain.

See the acquisitions by brand below:

  • Audi — 9
  • BMW — 6
  • Buick — 9
  • Cadillac — 3
  • Chevrolet — 21
  • Chrysler — 27
  • Dodge — 26
  • Fiat — 3
  • Ford — 22
  • GMC — 7
  • Honda — 6
  • Hyundai — 9
  • Infiniti — 2
  • Jaguar — 3
  • Jeep — 27
  • Kia — 3
  • Land Rover — 3
  • Lexus — 6
  • Lincoln — 5
  • Maserati — 1
  • Mazda — 4
  • Mercedes Benz — 5
  • MINI — 4
  • Nissan — 14
  • Porsche — 1
  • Ram — 26
  • Subaru — 3
  • Toyota — 12
  • Volkswagen — 7

We’re going to stay on the fence with our outlook for the second half. Whether the slowdown of the second quarter carries over into the second half of the year is a tough call. There are several conflicting factors.

On the downside, we have the uncertainty created by Brexit along with an automotive sales market that appears to be plateauing. And the shootings that continue to be front and center in our country do nothing to help consumer confidence.

Add to that, an automotive sales market that appears to be plateauing.

On the positive side, interest rates are holding firm and the country saw a strong jobs report from June.

Money continues to be cheap and that probably has driven much of the buy-sell market the last two years. As long as that dynamic remains, the market should be, at least, moderately brisk. The challenge is how to gauge the market — and the reality is, we may not know for several months if prices are actually trending downward.

Our perspective is that for the foreseeable future, prices and multiples will continue to be driven by individual store and local market dynamics, rather than national or global trends.

We, along with several brokers we’ve talked to, are seeing more potential sellers testing the market — in part because of the high prices that have been paid for dealerships over the last 18 months — and  their sensing the peak may be nearing its end. That may not translate into actual transactions but it is keeping CPA firms and brokers busy doing valuations.

Meanwhile, several of the big buyers — along with some of the public dealer groups — over the last three years appear to have slowed down, possibly to digest their big spends.  Although, there seems to be an ebb and flow to the deal flow. Except for the rare big deal — one or two a year — most of the transactions involve one to three stores.

The second half of the year could have one or two big surprises based on rumors we are hearing. And if prices do indeed start to come down, that likely will reheat buy-sell activity toward the end of the year.

For previous 2016 analysis of the dealership buy-sell market, Click Here.

About The Banks Report:


Designed for top automotive executives, dealers, industry analysts and investors who want to cut through the noise and get an accurate picture of what’s going on in the Automotive Retail space, the Banks Report is an online source that provides subscribers with daily insight into the top news stories of the day.

The Banks Report was created by Cliff Banks, an award-winning journalist with more than 20 years in the automotive retail space. As an editor of two automotive-related media companies, he built a vast network of sources ranging from CEOs to service technicians at the dealership. There’s no one better at connecting the dots and putting the news into perspective.

Become a subscriber and get access to more in-depth analysis on the dealership buy-sell market — including the industry’s most comprehensive list of acquisitions going back to January 2013.

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