Auto Dealer Valuation Insights

February 14, 2022 Valuation Issues

LOV(E): What Are the “Levels of Value” and Why Does It Matter to Auto Dealers?

Part I

In the spirit of Valentine’s Day, we cover a topic that may seem too theoretical; however, the shareholders in your business must understand it – LOV – or the “Levels of Value.” The Levels of Value refers to the idea that while “price” and “value” may be synonymous, they don’t quite mean the same thing. A nonmarketable minority interest level of value is very different from a strategic control interest level of value. In this week’s post, we explain what each level means and how each specifically relates to auto dealers. This will be the first part of a two-part blog series.

February 7, 2022 SAAR

January 2022 SAAR

SAAR reached a seven month high in January, totaling 15.0 million units on an annualized basis. SAAR was up 20.0% from last month but down 10.4% from January 2021. While the SAAR certainly improved, raw sales volume in January was the lowest it has been since April 2020. Read more about it in this week’s post.

January 31, 2022 Special Topics Valuation Issues

Don’t Turn a Blind Eye to Fixed Operations

A Look at the Importance and Stability of Fixed Operations

While fixed operations may not be grabbing any of the current headlines, auto dealers should remain focused on their importance and stability to the overall success and profitability of a dealership.  In this blog post, we analyze the recent historical contribution of fixed operations to overall dealership metrics, analyze several key indicators of future performance, and explore several myths and the changing landscape of the service department and customer relationship.

January 24, 2022 COVID-19 Coverage Electric Vehicles Special Topics Valuation Issues

The Future of Auto Dealerships

How Inventory Shortages and Electric Vehicles May Shape the Future of Automotive Retail

Just as December is a good time to look back and reflect, January is a good time to look forward, to 2022 and beyond. When we value auto dealerships, we look back at performance in prior years because this helps to inform reasonable expectations for future performance. Prior to the pandemic, the directly preceding twelve months of performance may have been a reasonable proxy for ongoing expectations. However, throughout 2020 and 2021, discussions about when things will return to “normal” or whether we’re in the “new normal” have taken center stage.

In order to look forward, we must also consider the past, or as Shakespeare’s Antonio would say, “What is past is prologue.” In this post, we look at two key trends in 2021 (inventory shortages and electric vehicles/direct selling) and how they may inform how automotive retailing will look in the future.

January 17, 2022 SAAR Special Topics

Auto Industry Trends to Monitor in 2022

Less Is More?

What trends can we expect to see in 2022 for the auto industry? What trends will we see “less” of? What trends will we see “more” of? In this post, we examine some of these trends and offer some predictions for industry conditions in 2022.

January 10, 2022 Electric Vehicles SAAR

December 2021 SAAR

The December SAAR totaled just 12.44 million units, down 3.5% from last month and 23.7% from December 2020. Inventory shortages, supply chain issues, and consistently high demand have been commonplace in the auto industry since the summer. That being the case, December’s low SAAR should not surprise many. In this week’s post, we discuss inventories, transaction prices, electric pickup trucks, and the outlook for January 2022.

December 27, 2021 Used Vehicles

2021: The Year of the Used Car

What Does This Mean for Dealers and Consumers?

2021 was an interesting year for auto dealers. In this post we discuss what things will look like when we return to a more “normal” operating environment. Specifically, what negative equity from used car buyers in 2021 may mean for dealerships.

December 16, 2021 Special Topics

‘Twas the Blog Before Christmas…

2021 Mercer Capital Auto Dealer Holiday Quiz

As year-end approaches, we hope to spread some cheer with our Auto Dealer holiday quiz. Merry Christmas!

December 13, 2021 SAAR

November 2021 SAAR

This month’s SAAR came in below expectations as the industry experienced only slight inventory improvement from the historic lows of September and October. For our last SAAR blog of 2021 we provide some commentary on what seemed to work well for auto dealers in 2021 and what changes might be around for a while.

December 8, 2021 Mergers, Acquisitions, & Divestitures Public Auto Dealers Valuation Issues

Q3 2021 Earnings Calls

Q3 earnings calls across the group of public auto dealers began with similar themes from the prior two quarters: record profits and earnings, record Gross Profits Per Unit (GPU) on new and used vehicles, and tightening inventory conditions. In addition to those themes, we also discuss M&A, inflation, and other areas of profitability for the public auto dealers.