Category

Public Auto Dealers

---

May 30, 2025 Blue Sky

Blue (Sky) Is in the Eye of the Beholder – Part 1

Perspectives on Auto Dealership Blue Sky Multiples and Valuations

On a recent client engagement, I was asked the question, “Why are Haig and Kerrigan’s multiples so far apart?”

I’ve never really viewed them that way, as the blue sky multiples published in their quarterly newsletters tend to cluster reasonably close together. While their multiples are usually within 1x of each other, this difference can be more pronounced on the lower end of the range as the decline in value from a 4x multiple to a 3x multiple is 25%.

In this week’s post, we reached out to our friends at the premier auto dealer investment banks to hear what they had to say.

March 20, 2025

Q4 2024 Earnings Calls

Auto Industry Volumes and Per-Unit Profitability Continue to Normalize

Auto retailer executives had a lot to say during the Q4 2024 earnings calls. In this week’s post, we recount three major themes from the public auto companies’ earnings calls.

February 21, 2025 Mergers, Acquisitions, & Divestitures Special Topics

Nissan’s Search for a Merger Partner

On December 23, 2024, Honda Motor Co. and Nissan Motor Co. shook up the automotive world by announcing a memorandum of understanding (“MOU”) to explore a potential merger alongside Nissan’s partner Mitsubishi. However, the road to consolidation proved bumpier than expected, as negotiations unraveled due to disagreements over the merger structure. While the formal merger talks have been publicly shelved, the question remains: Does Nissan still need a strategic partner to secure its future? And what does this uncertainty mean for Nissan dealers navigating the industry’s shifting tides? In this week’s post, we explore the rationale of a Nissan merger and what this might mean for Nissan dealers if a merger agreement happens sometime in the next year or two.

August 23, 2024

Q2 2024 Earnings Calls

Auto retailer executives had a lot to say during the Q2 2024 earnings calls. The four main topics discussed on the calls include the effects of the CDK cyberattack, inventory management, consumer affordability, and the consumer shift to hybrid vehicles. We unpack these trends in this week’s post.

April 5, 2024 Special Topics Valuation Issues

Just Released: Year-End 2023 Auto Dealer Industry Newsletter

The year-end 2023 issue of “Value Focus: Auto Dealer Industry Newsletter” is now available. For year-end industry metrics and other helpful industry insights, download the newsletter.

March 29, 2024 Blue Sky Mergers, Acquisitions, & Divestitures

Public Auto Dealer Profiles: Group 1 Automotive

The automotive dealership industry remains highly fragmented, with publicly traded auto dealers owning only a small fraction of the total number of dealerships in the U.S. The business models of privately held and publicly traded auto dealers differ significantly, with the latter benefiting from greater scale, diversification, and access to capital. Group 1 Automotive, a key player in this sector, has demonstrated resilience in its operations and financial performance, while also pursuing strategic initiatives such as the development of its online platform, AcceleRide, and a careful approach to acquisitions and capital allocation.

March 13, 2024

Q4 2023 Earnings Calls

New Vehicle Resilience, Lightly Used Inventory Scarcity, and Disappointing EV Sales

The auto retail industry is experiencing a resilient market for new vehicles, with improved inventory and greater sales volumes, despite declining per-unit profitability. However, the used vehicle and electric vehicle market face challenges. We analyze the trends and potential future challenges from the top 6 public auto dealers’ earnings calls in this week’s post.

January 26, 2024 Current Events Used Vehicles

Vroom in the Tomb and Used Vehicle Gloom

What Does the Collapse of Vroom Say for Auto Dealers?

In this insightful post, we delve into the tumultuous journey of Vroom, a once-promising online automotive retailer. The post, aptly titled “Vroom in the Tomb and Used Vehicle Gloom”, offers a comprehensive analysis of Vroom’s history, from its IPO in 2020 to its recent announcement of ceasing e-commerce operations. This story is not just about a single company, but a reflection of broader industry trends and lessons for auto dealers. By understanding Vroom’s journey and the factors that led to its downfall, readers gain insights into the possible future of automotive retail, the impact of economic changes on the industry, and the evolving role of e-commerce.

October 20, 2023 Special Topics Valuation Issues

Just Released: Mid-Year 2023 Auto Dealer Industry Newsletter

We are pleased to release our latest edition of Value Focus: Auto Dealer Industry Newsletter.

August 25, 2023 Supply Chain Used Vehicles

Q2 2023 Earnings Calls

Lower New Vehicle Supply Boost Fails to Lift Profits; Used Vehicle Prices Drop Amid High Demand

The automotive market is experiencing a shift as improved new vehicle availability is affecting used vehicle prices and profitability. Insights from industry leaders like Lithia, AutoNation, and Asbury indicate important trends, from stock incentives for General Managers to the implications of electric vehicle maintenance on dealerships. This piece explores these dynamics, touching on the potential for pent-up demand and the future of dealership sizing in a post-COVID landscape.

March 31, 2023 Blue Sky Mergers, Acquisitions, & Divestitures

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 17, 2023 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.

October 24, 2022 Special Topics Valuation Issues

Mid-Year 2022 Auto Dealer Industry Newsletter Release

We are pleased to release our latest edition of Value Focus: Auto Dealer Industry Newsletter. The newsletter features a commentary on industry data from mid-year 2022.  Additionally, this issue includes two timely articles: “2022: How Is the Auto Industry Doing and What Does the Future Hold?” and “Earnings Calls: Executive Summary.”

August 16, 2022 Blue Sky Valuation Issues

Q2 2022 Earnings Calls

Persistent New Vehicle Inventory Shortages Keep Days’ Supply Low and Pre-sales High - Consumers May Be on Shakier Ground, But Demand is Still Strong

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.

July 26, 2022 Supply Chain Used Vehicles

Carvana Is Looking More Like Icarus

How the Pandemic Darling May Have Flown Too Close to the Sun

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.

June 7, 2022 SAAR

May 2022 SAAR

Can Auto Dealers Continue to Outperform OEMs?

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?”

May 23, 2022 Supply Chain Used Vehicles

Q1 2022 Earnings Calls

Large Dealer Groups Continue to Invest in the Franchise Dealer Model, Managing Their Dealerships as Portfolios

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.

March 28, 2022 Blue Sky Mergers, Acquisitions, & Divestitures

Public Auto Dealer Profiles: AutoNation

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.

March 15, 2022 Used Vehicles

Q4 2021 Earnings Calls

Inventory Shortages Continue to Dominate the Auto Dealership Operating Environment

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.

December 8, 2021 Mergers, Acquisitions, & Divestitures 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.

October 5, 2021 Mergers, Acquisitions, & Divestitures Special Topics

September Acquisitions by Sonic, Asbury, and Group 1 and What They Mean for Privately Held Auto Dealerships

Smallest Public Players Getting Larger

In three consecutive weeks, 117 auto dealerships were bought across 3 transactions, each scooping up more dealerships than the last. The three smaller pure-play public auto dealership companies (Group 1 Automotive, Sonic Automotive and Asbury Auto Group) all made sizable acquisitions in a red hot M&A market coming after Lithia purchased a large private auto group back in April.

In this week’s post we discuss how these transactions highlight a couple of key themes in the marketplace for auto dealers.

September 20, 2021 Blue Sky Mergers, Acquisitions, & Divestitures

Public Auto Dealer Profiles: Sonic Automotive

There are six primary publicly traded companies that own approximately 923 new vehicle franchised dealerships as of Q2 2021, or 5.6% of the total number of dealerships in the U.S. (16,623 at year-end 2020 per NADA). In this second installment of our series profiling the six publicly traded companies, we focus on Sonic Automotive.

Our goal with this series is to provide information and insight that can 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 in benchmarking to public auto dealers.

August 23, 2021 Mergers, Acquisitions, & Divestitures Valuation Issues

Q2 2021 Earnings Calls

Public Auto Dealers Weigh Record Profits, Days’ Supply, and Capital Allocation

Second quarter earnings calls across the group of public auto dealers began with similar themes: record profits and earnings, record Gross Profits Per Unit (GPU) on new and used vehicles, and tightening inventory conditions. This week we take a deeper dive into some of those themes including remarks from management, related to expectations moving forward.

August 16, 2021 Current Events Special Topics

Used Vehicle Margins in 2021

How Large Used-Only Auto Retailers Are Measuring Up

As our dealer clients know, automotive retailing competition has intensified with large, well-capitalized online-only retailers getting plenty of attention. Due to imbalances between supply and demand, gross margins on both new and used vehicles have increased in 2021.

In this post, we survey gross margins for the publicly traded dealerships, in light of the current operating environment and reconsider the investment thesis put forth by the new entrants.