Regular updates on issues important to the Auto Dealer industry
In November 2023, the SAAR for the auto industry showed year-over-year growth, maintaining a 16-month trend of improvements. Despite a general slowdown in growth, the industry’s unadjusted sales reached their highest level for November since 2019, with expectations of a further increase in December. A rise in vehicle inventory and Days’ Supply suggests a recovering market with potential challenges and opportunities ahead.
In the evolving landscape of vehicle transactions, consumers have veered away from leasing due to factors like inventory shortages, higher interest rates, and less attractive leasing incentives. Despite this shift, leasing remains a cheaper option than buying, with dealers and manufacturers closely monitoring the market’s changing dynamics. As leasing shows signs of recovery in 2023, its future in the auto industry hinges on factors like market trends, consumer behavior, and effective dealership strategies.
Last month, we attended the 2023 AICPA Dealership conference and in this post present key takeaways on two sessions that are of interest to our blog readers: “Driving Success in Auto Retail” and “The Electrification of Auto Retail.”
The October 2023 SAAR data indicates a nuanced picture of the auto industry, showing a slight decline from the previous month but a notable increase compared to last year, with sales reaching the highest October level since 2020. While the seven-month streak of double-digit year-over-year SAAR improvements has ended, the overall trend remains positive with a steady recovery in the industry inventory-to-sales ratio and an increasing Days’ Supply. This detailed analysis, including insights on inventory levels, transaction prices, and future outlooks, provides a comprehensive understanding of the current state and projections for the auto industry.
Mercer Capital’s Scott Womack had the pleasure of being invited to record a series of videos created by the Rawls Group, where he talked with partner and succession advisor Dan Iosue. Get to know what both Dan and Scott do best as they talk about everything from the best timing for valuations to how to successfully negotiate business disputes in the auto industry.
Understanding the intricacies of business valuation, particularly for auto dealerships, involves a comprehensive examination of balance sheets, income statements, and normalization adjustments. We explore the significance of tangible and non-operating assets, the nuances of working capital, and the critical nature of management insights in assessing a dealership’s true value. A case study highlights the multifaceted approach required, underscoring the importance of expert analysis in navigating the complex terrain of financial assessments and valuations.
We are pleased to release our latest edition of Value Focus: Auto Dealer Industry Newsletter.
The automotive industry has witnessed its fourteenth consecutive month of annual improvements in the Seasonally Adjusted Annual Rate (SAAR), with September 2023 recording a SAAR of 15.7 million units—a 14.9% increase compared to the previous year. However, we anticipate a potential end to the double-digit year-over-year improvements streak in the coming month. With challenges like the United Auto Workers strike and changing supply chain conditions, it remains critical to monitor consumer activity and sales trends, especially given the decline in transaction prices and surge in incentives.
The United Auto Workers (UAW) strike has been ongoing for almost a month now. In this post, we talk about how we got here, updates on the strike, and the strike’s anticipated impact on auto dealers.
In the upcoming month, Scott Womack and David Harkins will present at three different forums, shedding light on the pivotal aspects and considerations of auto dealer valuations, including special considerations in litigation/buy-sell matters. They will delve into why traditional market approaches are generally not applicable for the valuation of auto dealerships, especially single rooftop operations, and explore the limitations of existing database evaluations. Beyond this, they will also explore the changing dynamics of value drivers like real estate and employee management, highlighting the shifting landscape as the industry moves towards digital and online platforms, and offer insights and suggestions for navigating buy/sell litigation and ensuring fair and consistent transactions.
