Dealership Buy-Sell Market Reaches Record Highs in H1
According to Kerrigan Advisors, the auto dealership buy-sell market reached unprecedented levels in the first half of 2024, with transaction volumes nearly doubling pre-pandemic averages.
Analysts said the surge is driven by robust demand for high-performing dealerships, strong blue sky values, and concerns from smaller dealers around growing technology costs to keep up with modern consumer and data management challenges such as the CDK cyberattack.
The report also highlights trends such as rising dealership valuations, growing interest in EV-focused operations, and the continued expansion of multilocation dealership groups.
Kerrigan Advisors attributes this growth to sustained consumer demand and the financial health of the automotive retail sector. Despite challenges like inventory shortages, the uncertainty around the future of EV, and a murky economic outlook, the buy-sell market remains dynamic, offering a record number of opportunities for both buyers and sellers.
Erin Kerrigan of Kerrigan Advisors said she has also seen an increase in OEMs being more active in the buying process, even going so far as to try and enact a right of first refusal.
“We’ve seen some OEMs brazenly attempt, unsuccessfully, to employ a ROFR in states where the tactic is explicitly disallowed by franchise law,” Kerrigan said. “The OEM’s goal is often to supplant a seller’s selected buyer with a designated, favored dealer, resulting in further concentration of dealership ownership in the hands of the most dominant industry consolidators. This does not enhance the diversity of an OEM’s network.
“Most troubling, in some cases OEMs are deciding to ignore franchise laws in a buy-sell, a highly concerning precedent which emboldens other OEMs eschew auto retailers’ hard-fought legal protections meant to preserve a dealer’s blue sky market value,” Kerrigan added.
