Auto Dealer Valuation Insights

May 12, 2023 Special Topics

Infrastructure Investment for EVs, Data Privacy, and Dealership Buy-Back Programs

2023 NADC Conference Update

The recent NADC conference unveiled many developments that are shaking up the auto dealer industry. Unpacking the evolving shift towards electric vehicles (EVs), we heard about infrastructure investments and the legal labyrinth posed by new EV-specific brands. As technology in vehicles leaps forward, we also learned the challenges of data privacy and consumer data protection laws. And for those dealers hesitant about the EV transition, dealership buyback programs may be on the table. These issues, among others, are steering the future course of the auto industry, demanding a watchful eye. Discover how these evolving landscapes could impact you.

May 5, 2023 SAAR

April 2023 SAAR

The April 2023 SAAR reveals a significant upswing in vehicle sales, with an 11.4% increase from April 2022. This marks the ninth consecutive month of year-over-year growth, emphasizing the improvement in vehicle availability. As we compare the inventory to sales ratio over the past three years, it’s clear that the industry has recovered from the pandemic’s impact on demand and supply chain shortages. Transaction prices are currently experiencing a slight normalization, while incentive spending is on the rise. With supply chain conditions gradually improving, the outlook for May 2023 remains optimistic. Read the full analysis to discover what this might mean for the automotive industry and potential buyers.

April 27, 2023 Special Topics Valuation Issues

Middle Men: Family-Owned Auto Dealerships

As an auto dealer, you may be wondering what is my dealership worth? In this video, Scott Womack discusses the key value drivers of an auto dealership.

April 21, 2023 Electric Vehicles Special Topics

EV Potpourri

Discussing Levels of Charging to OEM Requirements of Dealers

There are exciting developments in the electric vehicle (EV) market, where sales momentum continues to build as EVs make up an increasing share of new light-duty vehicle sales. Learn about the different charging levels, the various requirements automakers have for their dealers, and the expanding presence of charging stations at various retailers and restaurants. As major auto manufacturers are investing in and adapting to the EV revolution, sustainable transportation appears to be the way forward in this rapidly growing industry.

April 12, 2023 SAAR

March 2023 SAAR

Is North American Auto Production Lagging Behind?

The March SAAR was 14.8 million units, down 1.2% from last month but up 9.3% compared to March 2022. Year-over-year improvements in the SAAR continue to persist as inventory is more available compared to this time last year. In fact, this month marks the eighth month in a row of year-over-year improvements in the SAAR and signals consistency in auto production and auto demand trends.

March 31, 2023 Blue Sky Mergers, Acquisitions, & Divestitures Public Auto Dealers

Public Auto Dealer Profiles: Asbury Automotive Group

As discussed in previous installments of this blog series, six primary publicly traded auto dealers own over 1,300 new vehicle franchised dealerships as of year-end 2022. In other words, that’s less than 10% of the total number of dealerships in the U.S. (approx. 16,750 as of NADA’s mid-year 2022 report). The proportion of total U.S. dealerships that these publics own has increased, though it still demonstrates how fragmented the industry continues to be.

Our goal in highlighting Public Profiles is to serve as a reference point for private dealers who may be less familiar with the public players, particularly if they don’t operate in the same market. Larger dealers may benefit from benchmarking to public players. Smaller or single-point franchises may find better peers in the average information formerly reported by NADA or more regional 20 Group reports but might still find value in staying plugged into public auto dealers’ performance.

This week’s post covers Asbury Automotive Group, the second smallest of the six publicly traded automotive retailers in the United States.

March 24, 2023 Special Topics Valuation Issues

Plan for the Unexpected

Succession Planning for Auto Dealers

The 2023 NCAA College Basketball Tournament began last week. Many of us have been checking our brackets obsessively.  There’s a reason it’s called March Madness.  Who would have predicted that Fairleigh Dickinson would upset Purdue or that Princeton would upset Arizona and advance to the Sweet 16? The tournament and its bracket challenges are full of possibilities but are also a source of frustration, given the unexpected twists and turns. In certain ways, succession planning for auto dealers mirrors the journey through the tournament. Just as the thought of a #16 seed beating a #1 seed wasn’t on our radars before 2018 (when #16 University of Maryland-Baltimore County beat #1 Virginia 74-54 on March 16, 2018), thoughts of a global pandemic or an inventory crisis caused by a microchip shortage weren’t expected either. The lesson to be learned: Plan for the unexpected.

In this post, we discuss some of the key factors to be considered in the succession planning process and why they are critical. 

March 17, 2023 Public Auto Dealers SAAR Supply Chain Used Vehicles

Q4 2022 Earnings Calls

Executives Anticipate a Return to Normal

In 2022, fewer than 14 million light vehicles were sold, which was the lowest level since 2011. Supply constraints hampered productions from automakers, which led to higher profits for auto dealers on each vehicle they were able to acquire and sell, both new and used. Vehicle production improved gradually throughout the year, which is anticipated to continue through 2023.

This week we review the Q4 2022 earnings calls from the executives of six publicly traded auto dealers and discuss some of the major themes.

March 9, 2023 SAAR

February 2023 SAAR

The February SAAR was 14.9 million units, down 6.3% from last month but up 8.6% from February 2022. Year-over-year increases in the SAAR have been a theme throughout the last several months. In fact, February 2023 marks the seventh month in a row that the SAAR improved from the year prior. Looking ahead, we believe that it is likely that year-over-year improvements will continue for several more months as nationwide inventory balances continue to recover.

March 3, 2023 Special Topics Used Vehicles Valuation Issues

2022 Auto Dealer Industry Metrics Review

Has Profitability Peaked?

As we turn the calendar to March, 2022 is in the rearview mirror, and year-end statistics for the auto industry have been released. How did the industry perform, and what do the metrics tell us about the direction of the industry in 2023? In this post, we discuss the key metrics we track for the industry: new vehicle profitability, the supply of new vehicles, average trade-in equity values of used vehicles, the used-to-new vehicle retail unit sales ratio, fleet sales, and vehicle miles traveled.