Supply issues continue to dominate the industry with no end in sight. This week we discuss supply issues along with three other themes that were discussed during the Q2 earnings calls.
Supply issues continue to dominate the industry with no end in sight. This week we discuss supply issues along with three other themes that were discussed during the Q2 earnings calls.
The July 2022 SAAR was 13.3 million units, an improvement from last month’s 13.0 million units but down 10.2% from July 2021’s rate of 14.7 million units. The SAAR continues to reflect depressed sales rates as supply chain shortages restrict volumes across the United States. This week we briefly discuss the July 2022 SAAR but focus primarily on the passing of the CHIPS-Plus bill and how it might affect auto dealers.
The first half of 2022 is behind us, and with school about to start, report cards will be here before we know it. In that same light, the auto industry has published its statistics for the first six months. This post reviews predictions by industry analysts (and us) made at the beginning of the year by analyzing several key metrics. Additionally, we discuss threats that arose during the first half of 2022 and their impact on the auto industry for the remainder of the year and perhaps longer. Finally, we offer a few predictions for the second half of 2022.
Lately, Carvana has been in the news for all the wrong reasons. Its share price is down over 90% since its pandemic peak and currently sits below the low levels of March 2020. This post provides an abbreviated history of Carvana from its founding in 2012 to 2022 and discusses what its successes and struggles mean for traditional auto dealerships.
In each “Meet the Team” segment, we highlight a different professional on our Auto Dealer Industry team. This week we highlight David Harkins, Senior Financial Analyst. We hope you enjoy getting to know us a bit better.
The June SAAR was 13 million units, up 2.3% from last month but down 16% compared to June 2021. This month’s release closes out the second quarter of the year, bringing the total Q2 2022 SAAR to 13.4 million units.
Last week we attended the Annual Tri-State Convention for the Automotive Associations of Tennessee, Mississippi, and Alabama. The event provided a great opportunity to discuss trends in the automotive industry with industry participants and dealers from different manufacturers and geographic areas. In this blog, we discuss some of the trends discussed last week, including a variety of topics that we have covered before in this space. We also incorporate highlights of a presentation from noted industry analyst Glenn Mercer (no affiliation with Mercer Capital) regarding the “Dealership of Tomorrow.”
Auto dealers across the country rely on their Finance and Insurance (F&I) departments for a significant portion of their revenue. While top-line revenue in these departments typically makes up a small portion of a new car dealership’s total revenue mix, they have much better margins than their selling division counterparts. Third-party lenders play a larger role in the financing process for used dealers who do not have their own captive finance operations, and the economics are typically different from their new vehicle-selling counterparts.
We look at the layout and current state of the auto finance industry, as well as quotes from public auto executives about the current financing environment in this blog post.
Scott Womack recently sat down with Tony Karabon of DCG Acquisitions to discuss trends in the auto dealer industry such as transaction volume and multiples along with the implications of an agency model for OEMs. DCG Acquisitions is a national, full-service mergers and acquisitions firm representing buyers and sellers of automobile dealerships.
The May 2022 SAAR was 12.7 million units, down 12.6% from last month and 24.9 % from May 2021. The SAAR for this month fell short of expectations, and the drop in May’s sales pace makes it more likely that the second quarter of 2022 will not improve on the first quarter’s average SAAR of 14.1 million units. The SAAR for May was low due to low inventory across the country.
In this week’s blog post, we compare the stock prices of Ford, Stellantis, and GM to the timing of rate hikes by the Federal Reserve in 2022 in an attempt to answer the question “have higher interest rates hurt auto manufacturer stock prices?”
It’s earnings call season again. Themes from the Q1 2022 earnings calls were affordability issues, managing stores as a portfolio, the health of the franchise dealer model, and who repairs electric vehicle components and what that means for dealerships. All this against a backdrop of the continued inventory shortage makes for an interesting post. Read more here.
Connected cars are an undiscussed subplot in the current inventory crunch as more tech-enabled vehicles require more microchips, which as everyone knows by now are in short supply. In this post, we examine the size and growth of the connected car segment and discuss the struggle between auto manufacturers/OEMs and auto dealers over servicing these features.
The valuation of auto dealerships can be very challenging and complex. This week we discuss a recent Appellate Court decision, released from a case (Thomas A. Buckley v. Grover C. Carlock, Jr. et.al.) that we were directly involved in back in 2019. The case centered around a shareholder oppression issue involving a minority owner of an “ultra-high-line” auto dealership. Mercer Capital was hired by the Defendant to serve as the expert witness.
The April 2022 SAAR was 14.3 million units, up 6.5% from 13.4 million in March but down 21.9% from the recent high April 2021 SAAR of 18.3 million units. We dig into the comparison of the last three April SAAR figures (’20, ’21, and ’22) in this post, as dynamic conditions resulted in three very different narratives surrounding the SAAR.
If you only look at the Blue Sky multiples, you’re missing the bigger picture because valuations (multiples) may be flat, but values are up. In this week’s post, we look at an illustrative example and check in on the valuation multiples for luxury, mid-line, and domestic brands.
The March 2022 SAAR was 13.3 million units, down 5.3% from 14.1 million in February and down 24.4% from March 2021’s SAAR of 17.6 million units. This drop in the SAAR is a product of several factors. We dig into the low magnitude of the seasonal adjustment and ongoing supply chain issues in this post.
In each “Meet the Team” segment, we highlight a different professional on our Auto Dealer industry team. This week we highlight Scott Womack, Senior Vice President of Mercer Capital and the leader of the Auto Dealer industry team. The experience and expertise of our professionals allow us to bring a full suite of valuation, transaction advisory, and litigation support services to our clients. We hope you enjoy getting to know us a bit better.
There are six primary publicly traded auto dealers that own approximately 923 new vehicle franchised dealerships as of year-end, or approximately 5.5% of the total number of dealerships in the U.S. In this blog, we focus on the largest automotive retailer in the United States, AutoNation.
Our goal with the Public Profiles blog series 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.
What is succession planning? Succession planning is the transfer of value or leadership in a company or organization. For auto dealers, the dealership can represent a lifetime of efforts and relationships with key employees and customers.
This post discusses some of the key factors involved in the succession planning process and why they are so critical.
Inventory shortages are at the forefront of many of Q4’s earnings calls themes. While dealers across the country are looking to increase their new vehicle inventories, used vehicles are in greater supply. Numerous executives noted they are carefully managing this used inventory to avoid getting burned on currently elevated prices. In addition to inventory shortages, we also highlight comments concerning dealers charging above MSRP and the effect that has on the market.
The February SAAR was 14.1 million units, down 6.4% from last month and 11.7% below this time last year. The 2022 Q1 SAAR is expected to be the highest since Q2 2021 when the vehicle inventory shortage started to fully take hold. While the seasonally adjusted annual rate has certainly improved from the lows of late 2021, raw sales numbers tell a different story. Read more about it in this week’s post.
“Price” and “value” are terms that are often used interchangeably but their meaning may not be synonymous in the context of a private business, or in this case an auto dealership. In this post, we examine the differences between “price” and “value.”
In this two-part series, we continue our exploration of the “Levels of value.” The Levels of Value refer 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. Last week we described each Level of Value and why the concept is so important to auto dealers.
This week, we discuss four potential transactions in which selecting the appropriate level of value is critical and explain why: 1) estate planning, 2) corporate development, 3) divestitures, and 4) shareholder redemptions.
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.
