Dealership Buy-Sell Activity Hits Record Highs

By Staff Writer November 21, 2022

Haig Partners LLC released its closely followed Q3 2022 Haig Report, which tracks trends in auto retail and their impact on dealership values. Dealership profits have peaked due to rising interest rates, inflation, and low consumer confidence, but they are still higher than before the pandemic.

Buy-sell activity in the first nine months of 2022 is at record-high levels, with a total of 369 dealerships being acquired, up 5% compared to the same period in 2021. Private buyers have acquired 337 stores, 24% more than in the same period last year.

Buyers believe the long-term outlook for auto retail remains bright despite risks on the horizon from electric vehicles, the agency model, direct-to-consumer sales, changing consumer habits and other factors that could erode the franchise model over time. Some dealers are taking advantage of these robust conditions to exit and are finding ready buyers so long as their expectations are realistic.

“Buy-sell activity is ahead of last year through the third quarter, and our practice at Haig Partners expects to close on the sale of around 50 dealerships this year, all at very strong valuations,” said Alan Haig, president of Haig Partners. “Times are still very good for sellers

Dealership values peaked in Q1 and Q2 2022. In the third quarter and so far in the fourth quarter, many buyers have become slightly more cautious due to higher interest rates.

Despite a slight decline in value for most dealerships, Haig is seeing buyers being willing to pay significant premiums for the highest quality dealerships, namely high-volume luxury, and Toyota dealerships in prime markets.

Ford and Lincoln EV programs may be eroding franchise value. Some dealers are excited that Ford is trying to be a leader in EVs, but many have become highly critical. This drama is leading some buyers to steer clear of the brand. The team at Haig has experience with three recent transactions involving Ford dealerships and has seen three different responses from buyers.

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Last modified on Tuesday, 29 November 2022 13:50