Dealer Groups

LHM acquires 4th Denver Nissan store

DENVER - 

Larry H. Miller Dealerships recently acquired a Nissan store in Denver, making the city the group’s largest market outside of its Salt Lake City headquarters.

The Nissan store is located at 2400 W. 104th Avenue in Denver and has been renamed Larry H. Miller Nissan 104th.

This purchase follows four years of continued growth within the Denver market, according to the group.

LHM currently employs more than 1,000 individuals at 13 Colorado locations.

Timeline of Colorado expansion 

LHM's Larry H. Miller began his career in Denver as a parts salesman in 1970. By 1987, he opened Larry H. Miller Toyota Boulder, followed by Larry H. Miller Liberty Toyota Colorado Springs a year later and Larry H. Miller Toyota Colorado Springs in 1992.  

In the new millennium, the group opened Larry H. Miller Volkswagen Lakewood and Larry H. Miller Nissan Highlands Ranch in 2001 and 2006, respectively.

Larry H. Miller Chrysler Dodge Jeep Ram 104th in Thornton and Larry H. Miller Ford Lakewood opened in 2014. The next year, the group founded the Larry H. Miller Ram Truck Center in Federal Heights.

Last year, LHM returned to the Denver market to open Larry H. Miller Dodge Ram Cherry Creek, Larry H. Miller Colorado Chrysler Jeep and Larry H. Miller Fiat Denver in Aurora; and Larry H. Miller Nissan Southwest in Littleton.

LHM currently operates 61 dealership locations under 20 different automotive brands in seven Western states.

Consumers show strong midsize sedan loyalty

SAN FRANCISCO - 

Consumers’ loyalty to midsize sedans is currently strong and shopper interest across all luxury SUV/CUV segments is up 2 percent from April, according to Jumpstart Automotive Media’s latest shopper interest data report.

Interest in midsize sedans across Jumpstart’s portfolio of sites is up for the second consecutive month, rising by 4 percent during April and May.

Jumpstart’s May report determined 49 percent of midsize sedan shoppers surveyed by the company are exclusively researching vehicles in this category.

“As shopper interest in SUVs and CUVs has grown exponentially over the past few years, luxury auto brands have been expanding their lineups to include more size, feature, and pricepoint options. And we’re seeing that these brands are now experiencing broad audience appeal,” Jumpstart marketing and strategic insights vice president Libby Murad-Patel said in a news release.

“We are also interested to see that midsize sedans — a segment that had the fifth largest loyalty decrease in 2015 – 2016 (down 11 percent) — has seen loyalty grow every month this year. As loyalty continues to be a challenge, especially amidst the growth in SUV and CUV options, this is impressive.”

Behind Ford and Chevrolet, holding its rank as the third most-shopped brand, Toyota gained 6-percent share last month.

Toyota saw success among some of its core and newer models such as the Camry, RAV4 and C-HR.

Fellow Japanese brand, Mazda, also gained 6 percent share in May, the automaker currently ranks eighth among of all brands researched on Jumpstart sites.

The report broke down Toyota & Mazda growth trends in May:

  • Toyota

— Camry (+8%, rank 17)

— RAV4 (+16%, rank 32)

— Corolla (+15%, rank 55)

— C-HR (+89%, rank 104)

— 86 (+41%, rank 136)

— Yaris iA (+19%, rank 248)

  • Mazda

— CX-5 (+7%, rank 13)

— MX-5 Miata (+18%, rank 14)

— CX-9 (+20%, rank 26)

— 6 (+17%, rank 77)

— CX-3 (+4%, rank 85)

Jumpstart's May report is based on the shopping behavior of more than 17 million car shoppers who are researching vehicles across the company’s portfolio of automotive publishers.

Dealertrack celebrates new Long Island headquarters

LAKE SUCCESS, N.Y. - 

In celebration of its new headquarters in Long Island’s Village of North Hills, Dealertrack was set to hold a ribbon-cutting ceremony on Wednesday afternoon for the project’s team members and contributors with state and local officials.

The 10-acre LEED-specified headquarters with a 230,000-square-foot facility is set to be home to roughly 600 team members early next month.

“When Dealertrack originally announced the new building plan three years ago, it was a vision driven by our team members to have a work environment that inspired innovation and collaboration, and overall health and wellness in the workplace,” Dealertrack senior vice president of finance and operations Dean Tilsley said in a news release. “As we have grown over the years, we have done so with an unwavering commitment to the Long Island metro area.”

With a 17-year lease, Dealertrack is committed to remaining in Long Island, according to the company.

“As mayor, I welcome Dealertrack to the Village of North Hills. I am pleased to participate in the ceremonial ribbon cutting for the state-of-the-art building that will serve as the headquarters for this fine company,” Village of North Hills Mayor Marvin Natiss said in the release.

The new facility features indoor basketball and volleyball courts, a cafe, cardio room and yoga studio, indoor and outdoor dining areas, game rooms and a walking trail.

TRITEC Real Estate Company, which served as construction manager for the project, partnered with Castagna Realty as the new headquarters' real estate developers.

“TRITEC Development, LLC, in partnership with Castagna Realty, is proud to have conceived and created this landmark headquarters facility, providing a cutting-edge, amenity-rich environment that will allow Dealertrack to continue to build one of Long Island's most talented teams in the tech industry,” TRITEC Principal Jim Coughlan said.

We appreciate the cooperative efforts of the Village of North Hills, as well as the empowering investments from both the New York State Empire State Development Corp. and the Nassau County IDA; this structure stands as testimony to the success of the public investment in local economic development.”

Spector Group oversaw the building envelope and Combined Resources designed the interior spaces, according to Dealertrack.

“For 51 years, Spector Group has built many landmarks on Long Island. Dealertrack joins the architectural landscape as an icon at the gateway to the Long Island peninsula,” said Spector Group Principal Marc Spector. “It is a fresh, unique design for Long Island and the tri-state area. We believe this design reflects the energy and growth of Dealertrack and we're delighted to be adding such a distinctive structure to Long Island's rich architectural legacy.”

The new headquarters is located at 3400 New Hyde Park Road in New Hyde Park, N.Y.

“We are proud to offer our team members a state-of-the-art facility where they can continue to develop solutions that are changing the way the world buys and sells vehicles, and also contributes to local economic prosperity,” Tilsley added.

CarStory revamps solution to keep mobile shoppers & ‘skimmers’ on VDPS

CARY, N.C. - 

CarStory has released an enhanced version of its Market Reports that is designed to heighten mobile shopper engagement on VDPs, according to the artificial intelligence platform’s creator Chad Bockius.

“The main focus for this release was all about the design, in terms of the look and feel, but more importantly how we represent the analytics that we share and how to optimize Market Reports for mobile shopping,” Bockius said in a phone interview with Auto Remarketing.

“Over three-fourths of consumers today are shopping on their mobile device — both on their couch and on the lot. And as a result of that, it has created a culture of skimmers.”

Because mobile devices have become the primary type of interface for a large majority of the population it is important to make mobile shopping experiences conveniently engaging, Bockius explained.

“They’re going to skim information quickly and we had to address that,” he said.

“We had to create an experience that allows consumers to access and consume the data the way that they want it. Which is just a reality of 2017.”

CarStory Market Reports is now fitted with added additional data elements, such as a feature on the Market Reports home screen where machine learning is used to automatically identify images, according to Bockius,

“Based on our research, we know exactly which images consumers want to see first, and we use that data and our machine learning to process those images to create a collage on the first screen of the Market Report. Which is not just a nice design element, but more importantly it’s giving information to the consumer,” Bockius explained. “It’s not giving them the information over text, it’s giving them information visually, so they can see what features the vehicle has.”

Bockius said CarStory offers dealers three benefits: more engagement, more leads and ultimately more sales.

“In our research, we have found that dealers who have employed Market Reports see a 60 percent decrease in bounce rate. And we have seen a 24 percent increase in lead conversion,” he said.

Bockius believes the dealer VDP should be the best resource for a consumer who is making that decision to buy.

“The more people that you are bringing into the door, the more you are going to be able to sell. If you can’t engage that consumer on the VDP, it’s the equivalent of having that consumer walk off your lot,” he said.

“We have brought all the critical research information directly to bare on the dealers’ VDP to keep those consumers engaged and tell the consumer the whole story, so that ultimately they can make that confident decision to buy.”

CarStory has the largest depository of inventory data in the industry, according to Bockius.

“It’s quite amazing, the amount of science and the amount of data processing that occurs to generate these reports, but at the end of the day our goal is to hide all that to ultimately create a simple summary that consumers can access right on that dealer VDP,” he said. “When we analyze the data, we are looking at a specific vehicle relative to the market competition in a local area. All of our data comes down to two buckets of data we have to sort and analyze the first is all of the market supply data or the actual inventory, so what is available for sale today — that’s part of the data.”

Bockius said consumer demand data, which covers a variety of things, is the second source of CarStory data.

“We look at what consumers are searching for, the vehicles that they are spending their time on, the vehicles they are cross shopping and the features they are looking for,” he added.

Bockius mentioned that Kevin Frye, eCommerce director of Jeff Wyler Automotive Family once told him that with CarStory Market Reports, he can become an instant expert on every car on the lot.

“You can imagine how difficult it is for any salesperson to know the specific, the whole story about hundreds of cars,” he said. "We automate that process for you, we can put that information right in your pocket and you can be an expert whether you’re talking to a consumer on the phone or on the lot instantly, and that is going to help dealers move metal,”

CarStory is completely free to dealers. For more information, about Market Reports or to become a participating dealer, visit dealers.carstory.com.

Dominion integrates CRM with GM data

NORFOLK, Va. - 

Dominion Dealer Solutions’ CRM and lead management systems, Autobase and Web ControlTM, are now both premium CRM products for General Motors.

As part of GM’s Dealer Technology Assistance Program (DTAP), Dominion has agreed to complete integration to all available GM DTAP Data service integrations by the end of Q4. 

Through DTAP, GM makes its data available in their dealers’ own CRM systems to improve sales, customer experience and customer satisfaction.

"General Motors bestows a Premium product designation on select CRM solutions that provide deep database integrations so dealers can do business as efficiently as possible all in one place," Dominion director of OEM partnerships Ryan Kelly said in a news release. "Dominion is proud that both Web Control and Autobase are recognized as Premium CRM products and have been approved for the iMR Turnkey Vendor Program."

GM dealers who utilize either Dominion Autobase or Web Control can now access GM tools from the client record. Previously, the tools were only accessible from various GM websites and other GM internal systems.

Key integration points that have been enhanced include DCDE Customer Search, VPS – Incentives Offer Management and VPS – GM Credit Card.

The integrations are now available to both Dominion Autobase and Web Control customers at no additional charge.

Additionally, Dominion said over the next several months it will also be adding both its Vehicle Locate Service (VLS) and Vehicle Invoice Service (VIS) for the GM dealers.

Helion tests 125 dealership employees with ‘spear phishing’ cyber scam

TIMONIUM, Md. - 

Helion Automotive Technologies has a new data security warning for auto dealerships because in recent weeks spear phishing hackers have been busy planting malware inside of social media posts designed to lure employees of organizations to click on the post.

Dealership employees are ideal targets for spear phishers looking to grab Personally Identifiable Information (PII) and bank account information, according to Helion.

"This is the same spear phishing scheme that hackers have been using successfully in targeted email messages for several years now," Helion president and chief executive officer Erik Nachbahr said in a news release. "The problem is that although most employees have been told and know not to click on emails from people they don't know, they don't think twice when it comes to clicking on a message or offer in their Facebook feed. They are more trusting in a social media environment."

If employees take the bait of hackers and click on infected links, malware can be downloaded onto the employee's computer compromising the entire organization's network, the information technology solutions for auto dealers said.

Helion recently conducted a phishing test at an auto dealership by sending emails to 125 employees where three employees took the bait. When prompted by the website the email drove them to, they entered both their usernames and passwords.

If the attack were in fact real, the consequences could cost a dealership thousands, Helion said.

"That test was a good sample that revealed auto dealerships are very vulnerable to this type of attack and need to do a better job at educating their employees," Nachbahr said.

Nachbahr’s tips for preventing a spear phishing attack:

  • Instruct employees to never click on links in social media posts and messages from their computers or personal devices while at work
  • Require employees to change their network login passwords every 90 days
  • Encourage employees to keep social media profiles private and don't accept friend or connection requests from people they don't know
  • If employees receive a phone call, email message or social media message from a banking institution, vendor or other entity that asks for personal information, do not give this information verbally or via email, but contact the institution directly
  • Get cyber liability insurance, which covers costs associated with a data security breach and loss of data
  • Regularly apply software updates to Microsoft Windows, Internet Explorer and all software applications on every PC

KAR leadership set to speak at NIADA

CARMEL, Ind. - 

KAR Auction Services announced that four of its leaders from KAR and its ADESA and Automotive Finance Corp. business units will be featured speakers and panelists at the National Independent Auto Dealers Association Convention & Expo this week in Las Vegas.

The vehicle remarketing and technology solutions provider’s speakers include KAR chief economist Tom Kontos, AFC chief operating officer Joe Keadle, ADESA director of dealer consulting services Doug Hadden and AFC vice president of operations Johnny Shroyer.

KAR said Kontos and Keadle plan to discuss the current and anticipated economic strengths, weaknesses, opportunities and threats related to independent dealers on Thursday from 8:30 a.m. to 9:30 a.m. (PDT).

On Tuesday, Hadden will deliver a presentation on higher net profits that examines different ways to navigate through lower margins while achieving higher net profits and Shroyer will join other industry experts on the Floorplanning Tips for the Independent Dealer panel.

Both of those are on Tuesday from 4:15 p.m.to 5:00 p.m. (PDT).

For more information about the convention and this year’s speakers, visit www.niada.com.

2 dealer groups expand footprints in SoCal

CARY, N.C. - 

SoCal Penske Dealer Group announced it acquired the Fuller Ford, Fuller Honda, Fuller Kia and Fuller Collision Center in Chula Vista, Calif., further expanding its footprint in the Southern California market.

The former Fuller locations have been rebranded as Penske Ford Chula Vista, Penske Honda Chula Vista, Penske Kia Chula Vista and Penske Collision Center Chula Vista.

“Closing this purchase represents a significant milestone for SoCal Penske Dealer Group and gives us deeper roots in the San Diego retail market,” the group’s chief executive officer, Roger Penske Jr., said in a new release. “Fuller Motors is one of the largest employers in the City of Chula Vista.

“A great deal of effort from both sides went into ensuring a smooth transition for the Fuller employees. We are thrilled to now count their employees, guests and neighbors among our friends and family and look forward to developing strong ties to the local community.”

SoCal Penske now has a total of 14 dealerships in Southern California since acquiring the Fuller stores.

Galpin opens exclusive Kia dealership in Southern California

Galpin Motors’ latest franchise, Galpin Kia in North Hills, Calif., is just adjacent to Galpin’s main campus on Roscoe Boulevard and finished last month as the No. 8 Kia dealer in the country.

The new store is the exclusive Kia dealership in San Fernando Valley County and the 12th franchise to join Galpin’s collection of brands, which includes Ford, Lincoln, Mazda, Aston Martin, Honda, Subaru, Volkswagen, Lotus, Volvo, Jaguar and Spyker.

Galpin Kia officially opened in October and its inventory is made up of Kia’s full line of cars and SUVs.

“We couldn’t be more excited about the opening of our Kia dealership,” Galpin Motors president and chief operating officer Beau Boeckmann said in a news release announcing the opening. “I just returned from Seoul, Korea, where I was able to see the amazing Kia factory, its beautiful cars and wonderful designs.

“The automaker has been incredibly successful at building a line of stylish, quality cars that are still attainable for consumers. Having a Korean family, I feel especially honored to add a Korean brand into our Galpin family.”

In addition to its collection of franchises, Galpin Motors also operates its well-known customizing shop, Galpin Auto Sports (GAS). GAS is the former home to MTV’s Pimp My Ride and a popular shop for a number of Hollywood’s elite, according to the group.

 

Mobile auctions continue to evolve & attract dealers

CARY, N.C. - 

 As the mobile auction format continues to attract more dealers across the country, companies within the industry are continuing to push the wholesale auction experience and communicate the benefits that many used-car managers praise.

“We’re averaging well over 60 mobile auctions per month around the country right now, and that’s a huge increase from just barely over 20 a year and a half ago,” said Manheim’s Randy Beil. “Our core product is what we call true mobile; that is where we bring either a trailer or a bus fully equipped to handle an auction, simulcast, and an auctioneer.”

Beil, who is vice president of local/mobile at Manheim, said a large part of what he and his team does is to grow Manheim into different markets across the country where the company might not already have a presence.

“What we’re really trying to do is create a model to get into these markets, partner with dealers we already do business with and try to get more of their low-end business,” Beil said. “That’s exactly what we’ve done largely in our growth in the past year and a half.”

He said Manheim has been able to get in many cities through existing partnerships with dealer groups.

The company’s mobile sales are launched by two different platforms it refers to as true mobile and mini mobile. True mobile is its largest and core product.

“You get 100 percent of what you see in the auction but you bring it to the dealership, so we bring the auction to the dealership, and that’s what we call true mobile because that’s exactly the core of our product,” Beil said.

“We bring that auction to the dealership and we largely sell their trade-ins from that store or four or five stores at that auction. Some locations host sales once a week, sometimes we do it every other week, sometimes we do it once a month. It all depends on the volume that dealership has.”

Manheim has been expanding its mini mobile product over the past six months, according to Beil.

What differentiates them from a true mobile is it’s much more of a permanent auction, such as a two, three or four-lane facility.

“This is a basically a full on auction as far as a dealer is concerned, often it’s a one, two, three-lane auction that we get into a market and we open up a small auction and it’s a stand-alone auction for all practical purposes, but internally from our standpoint it’s kind of like a satellite auction because its’s still managed by a parent auction,” he said.

“We rely on the parent auction’s staff to help support the functions of the satellite auction.”

Of all the cars Manheim sells at its mini locations, all of the revenue and all of the expenses flow up to that parent auction.

“We brand them and we market them, we advertise them, it’s a stand-alone auction that looks a like just an others,” Beil said.

Mini mobile auctions bring in about 40 to 50 different sellers to each sale, while true mobile is usually one consigner, according to Beil.

The fundamentals of mobile

Digital technology is a fundamental resource mobile actions depend on, says Ryan Rickey, general manager of XLerate Group’s Your Auction Mobile sales.

“Traditional brick-and-mortar, where dealers go in and can check out cars week-in and week-out, sometimes these mobile auctions have a greater travel time. Rickey said. “We depend on the internet and our marketing tools via the internet so people can check out extensive pictures, pre-sale inspections — things of that nature, just to give them the confidence to bid online and or show up in person.”

Your Auction Mobile’s sales allow dealers managers to remain in their stores and focus on retail as opposed to running the “gauntlet of auctions,” he said.

“In today’s climate, post the recession, secondary lending became more aggressive and dealers started holding on to that c-paper. Having the auction onsite gives you a chance to potentially retail some of those vehicles you'd otherwise be wholesaling weekly,” Rickey said.

Taking it to a higher level

Auctions In Motion (AIM) started in 2006, as a completely mobile sale. It was purchased by what is now known as XLerate in in 2012.

“We literally went to the dealers’ lots and we would set up our pop-up tent along with a couple of trailers that would support the auction,” said George Pero, AIM founder and general manager at Corry Auto Dealers Exchange, an XLerate auction.

“The business gained momentum,” Pero continued. “First it was a bi-weekly sale and then it was a weekly sale and then it gained so much attention and critical mass business that we thought that the next step in progressing the expansion and growth of the business was to get a single free-standing facility where we would run a one-lane auction.”

When asked about any challenges associated with mobile sells, Pero said: “Challenges really aren’t that many or significant; I would say running out of space when you have a lot of consignment.

“For consignment, for a one-lane mobile sale is 150 to 200 units, they become so popular that we run out of space.”

Challenges remain

The challenges associated with mobile sales are similar to those of any auction, according to Jane Morgan, who is president of specialty auction divisions at ADESA and oversees mobile auction offerings and helps in geographic expansions.

“Educating dealers on how mobile sales work, why they should try mobile sales, and how mobile sales can benefit their business may be considered a challenge,” Morgan said.

Space may be a challenge, depending on the size of a dealer’s lot or the type of inventory, like if it is a mobile auction for heavy-duty trucks, for example.

Mobile auctions entails working with the seller to select their inventory in advance so it’s competitive in the marketplace, Morgan explained

She said selecting inventory far enough in advance is important to allow time to best match the right buyer to the right product.

Rickey added that a challenge he recognizes is larger competitors within the industry. “As an auction company, you see groups such as the larger groups in the industry — AutoNations, CarMaxes, they’re figuring out ways to do it themselves,” he said.

“The margins I think, are getting skinnier,” Rickey went on to say. “Profitability has to change, we just need to be aggressive and provide a service above and beyond our competition.”

 

Dealership buy/sell action to be ‘robust’ for rest of 2017

FORT LAUDERDALE, Fla., and IRVINE, Calif - 

While differing on how first-quarter activity unfolded, both Kerrigan Advisors and Haig Partners shared upbeat assessments of dealership buying and selling activity for the rest of 2017 as each used the adjective, "robust."

First, at Kerrigan Advisors, the firm reported that the action of dealerships changing hands “remains robust” for Q1 in spite of slowing vehicle sales and a slight dip in Blue Sky Values. According to The Blue Sky Report, a Kerrigan Quarterly, any negative headwinds are being offset by high dealership real estate prices.

Outpaced by the private companies in acquisition activity, Kerrigan Advisors indicated that publicly traded dealer groups are directing their focus to non-U.S. acquisitions. According to the report, macro-economic conditions, which offer opportunities for both optimism and pessimism, are contributing to a high level of activity in the buy/sell market, which is expected to continue throughout the year.

Kerrigan Advisors managing director Erin Kerrigan said, “2017’s buy/sell market is fueled by diverging viewpoints from conservative sellers and ambitious buyers — and is influenced by consistently high real estate valuations. Those confident in the long-term health of auto retail continue to seek acquisitions and investments.

“By contrast, the pessimists, and those who are generationally ready to go out on a high note, are increasingly choosing to exit the market, selling their dealerships at today’s high prices and avoiding a potential downturn. All of which contributes to a very active and robust buy/sell market,” Kerrigan continued in a news release.

Other key findings from Kerrigan Advisors’ Q1 2017 report include:

—Dealership real estate prices and rents rose considerably on a quarter over quarter basis. Real estate, for most dealers, is their highest value asset, far exceeding franchise value.

—Transaction activity increased slightly in the first quarter of 2017, exceeding 2015 and 2016’s high pace with 60 dealership buy/sell transactions completed in the quarter.

—2017 is tracking towards 240 transactions for the year.

—The number of multi-dealership transactions declined from 19 to 11. Kerrigan Advisors expects the pace of multi-dealership transactions to increase considerably as the year progresses.

—Public retailers’ acquisition spending decreased 12 percent. Since January, The Kerrigan Index, which includes the seven public auto retailers, is down 9.6 percent to 492, underperforming the S&P 500.

—The private sector acquired 93 percent of the franchises sold in the first quarter of 2017.

—Domestics continued to grow their share of the buy/sell market — a trend driven by the growing market share of trucks and SUVs.

—Import luxury franchises’ share of the buy/sell market declined by 45 percent.

The report also identified the following three market trends, which Kerrigan Advisors expects to affect the buy/sell market in 2017 and beyond. That group includes:

—Dealership profit plateau shifts buyer’s focus to current earnings

—OEMs’ buy/sell approval processes differ significantly

—Multiple arbitrage for dealership business lines continues

“Overall, we continue to expect 2017 to be a very active year for buy/sells with private buyers, new entrants and certain public buyers eager to put their capital to work. An increasing number of sellers are coming to market motivated by current prices and a strong desire to capitalize on today’s buy/sell activity,” Kerrigan said.

The view from Haig Partners

Meanwhile, Haig Partners reported that the number of dealerships sold in the U.S. declined 29 percent from 113 rooftops in Q1 2016 to 80 rooftops in Q1 2017, according to data published in the Q1 2017 edition of The Haig Report

The firm explained this decline may have been partly because of the uncertainty caused by the presidential election in the fall of 2016. Haig Partners indicated buyers were uncertain if Congress would pass tariffs that would raise the costs of most autos sold in the U.S., or if taxes would be cut, thereby leaving more proceeds for sellers.

The report goes on to mention buyers are also increasingly concerned about future profits at dealerships so they are proceeding cautiously.  And some sellers have not yet adjusted to new market conditions and may be asking too much for their dealerships.

Continuing the trend from 2016, Haig Partners noted demand for dealerships shifted from luxury and import brands to domestic brands that are heavier in trucks and SUVs. Purchases of domestic dealerships comprised 49 percent of total purchases in Q1, up from 43 percent in 2016. 

Purchases of luxury dealerships were just 14 percent in Q1, down from 22 percent in 2016. 

Haig Partners’ franchise blue sky multiples were unchanged in Q1.

Other key findings from the Q1 2017 Haig Report include:

—Macroeconomic indicators such as GDP, interest rates, employment, number of miles driven and consumer sentiment remain highly favorable for dealers.

—Other trends such as used car pricing, incentive spending by the OEMs, and rising inventories are growing less favorable to dealers.

—Retail sales are flat for the first four months of the year, although total sales, including fleet, fell by 2.4 percent.

—Declines in new and used gross profits per vehicle are being offset by gains in F&I and fixed operations.

—Sales and gross profits continue to increase at dealerships, but expenses are rising faster.

—Average profits per dealership fell 8.5 percent in Q1 2017 from Q1 2016. The average dealership pre-tax profit over the last 12 months was $1.437 million.

—Average estimated blue sky value per dealership dipped 2 percent from the end of 2016 to $6.92 million.

—Public auto retailers are spending more of their capital outside of core U.S. franchised vehicle dealerships, including stand-alone used car stores, international acquisitions and collision centers.

—Private equity firms and family offices continue to make substantial investments in auto retail.

Haig Partners pointed out that President Trump’s proposed plan to tax pass through entities like most dealerships would increase the amount of after tax income to many dealers by an estimated 24 percent to 35 percent, thereby raising the value of dealerships. 

If passed, the firm said dealership values should remain stable or rise, even if pre-tax profits continue to drift lower.

 “Despite the sharp dip in the first quarter, we expect dealership sales for the rest of 2017 to be robust,” Haig Partners president Alan Haig said. “There are many buyers, financing is still readily available, and more sellers are realizing that if they want to sell their dealerships before the next recession they will likely need to accept today's offer since tomorrow's offer could be lower.”

Haig Partners is seeing these conditions in its current engagements that include domestic, import and luxury dealerships that range from Florida to New York to California. The value of the transactions they have closed over the past two and a half years is approximately $900 million, including two of the largest transactions of 2016, so they have unique insights into current market conditions and how they impact dealership values.

More details

The Blue Sky Report, a Kerrigan Quarterly, is published four times a year and includes Kerrigan Advisors’ signature blue sky charts, multiples and analysis for each franchise in the luxury and non-luxury segments. The multiples are based on Kerrigan Advisors’ view of franchise values in the current buy/sell market and can be applied to adjusted pre-tax dealership earnings to estimate blue sky value. To download the report, click here.

The Haig Report is published each quarter and is a valued source of information to many in the auto industry who look to it for its comprehensive data, analyses and opinions about the auto retail industry. Included in each edition are Haig Partners' blue sky multiples that serve as a gauge for franchise values. To download the report, click here.