Blue Sky Values Soar for Dealerships

By Staff Writer November 18, 2021

Haig Partners released its Q3 2021 Haig Report, an industry quarterly report that tracks trends in auto retail and their impact on dealership values. Highlights include a significant spike in dealership profits and skyrocketing demand from dealership groups that want to acquire more stores. These trends have driven record-shattering blue sky values for dealerships. 

The chip shortage continues to create extraordinarily favorable conditions in auto retail. Dealership profits are erupting with the average privately owned dealership making $3.4M (excluding PPP) over the 12-month period ending September 2021.

Buy-sell activity is at record levels, reaching 575 this year, a 24% increase over the previous record of 463 in 2015. Blue sky values continue to shatter records, rising to an estimated 61% from the end of 2019.

Public company spending on U.S. auto acquisitions may reach $8B by year end 2021, 10x pre-pandemic levels.

Public equity valuations are 108% higher than they were before the ‘Chipdemic,’

 ”We are seeing plenty of dealers come to market to sell their stores. Profits are high, dealer confidence is high and interest rates remain low,” said Alan Haig, president of Haig Partners. “The high value for stores today is stimulating dealers to consider exiting even if they are not at retirement age.

“Average single point dealerships are worth about $25M all-in. Midsized groups are valued in the hundreds of millions of dollars. Large groups bring billions of dollars. At these values, dealers and their families are having conversations about the pros of remaining dealers, but also the risks and capital investments required if they remain dealers. We expect 2022 to be another excellent year for transactions.”

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Last modified on Monday, 22 November 2021 16:00