Haig Partners highlighted how lucrative it has been to be a franchised dealer, especially since the midpoint of 2019.

According to Q2 2021 Haig Report, the firm discovered through its project that tracks trends in auto retail and how they impact dealership values that for the 12-month period that ended June, average adjusted dealership profits reached $3.1 million, a record high and more than double average profits in 2019, the last year before the pandemic hit.

The indicated the blue-sky value for a typical privately-owned dealership has increased 52% since 2019 to reach $10.3 million, according to Haig Partners’ estimate, also at a record high level.

As a result, Haig Partners said buy-sell activity has also exploded with an estimated 422 dealerships sold during the 12-month stretch through the end of June. That’s 41% more than in 2019 before the pandemic.

Haig Partners went on to note that there have been more dealership sales during the last 12 months than in any other period since 2015 when Berkshire Hathaway acquired the Van Tuyl Group.

“It’s an odd time when an empty lot means an overstuffed wallet. Consumers have cash to spend but automakers are not able to produce enough units to meet demand due to a lack of microchips. Dealers are enjoying these unprecedented conditions of high margins and low expenses which are leading to record high profits and record high dealership values,” Haig Partners president Alan Haig said in a news release.

“Buy-sell activity is surging as buyers are eager to acquire more stores. Prior to the Pandemic we were tracking 75-90 dealerships sold per quarter and in Q2 2021 alone we saw 120 dealerships change hands,” Haig continued

“And since the lack of inventory is projected to last through the end of the year and beyond, we are expecting to see elevated profits and blue-sky values for some time,” he added.

The report showed public company spending on acquisitions has significantly increased.

In just the first six months of 2021, Haig tabulated that publicly traded groups spent almost $2.0 billion on acquiring dealerships, 756% more than they did in the first six months of 2020. The firm explained this massive increase is attributable primarily to Lithia, which alone spent $1.4 billion acquiring dealerships during the second quarter.

Haig went on to mention that equity valuations for the publics are 109% higher than they were before the pandemic.

“We expect Lithia to continue its aggressive pace and while they have been the most active buyer, the other public traded companies have also increased their rate of acquisitions,” the firm said.

“Group 1 acquired two Toyota dealerships that Haig Partners represented in Q1. In Q2, Penske and Sonic closed on acquisitions and AutoNation announced a sizeable deal,” the firm continued. “In addition to acquiring new car franchises some of the public buyers are also investing in used-car dealerships.”

For more information or to obtain the entire report, visit www.haigpartners.com.