Auto dealer blue sky values have recovered and are near record highs driven by high profits and strong demand for dealerships
FORT LAUDERDALE, Fla., Dec. 2, 2020 -- Haig Partners releases the Q3 Haig Report, the leading industry report that tracks trends in auto retail and how they impact dealership values. The auto dealership buy-sell market is rebuilding toward pre-COVID levels. The number of public and private dealerships that sold in the US increased 9% in Q3 2020 as compared Q3 2019, with a total of 95 dealerships changing hands.
"It has been an amazing quarter for the auto retail industry. We went from a catastrophe in April and May, to record profits," commented Alan Haig, President of Haig Partners. As published in the Q3 2020 edition of The Haig Report released by Haig Partners, new and used vehicle margins spiked and there has been a big decline in expenses as dealers cut advertising, compensation and floorplan. This is contributing to dealers making about $1.6M per rooftop, more than they have ever made, even amidst a pandemic.
Acquisition spending for the first three quarters of 2020 by publicly traded auto retailers exploded to $1.57B, attributable primarily to Asbury and Lithia.
Blue sky multiples are an estimated 0.5x higher than year-end 2019 multiples.
Other key findings from the Q3 2020 Haig Report include:
- Economic conditions continue to recover
- Dealership profits have set records in recent months
- Public company spending has reached all-time high levels
- Blue sky values are close to the highest levels ever recorded
- Public equity valuations are 40% higher than they were before the pandemic
The Haig Report includes data and analysis on the performance of auto dealerships, identifies noteworthy events to the industry, discusses trends in the M&A market for dealerships, gives guidance on estimated value ranges for different franchises, and provides an outlook for the M&A market. The Haig Report is based on data gathered from many public sources, as well as interviews with leading dealer groups and bankers, lawyers and accountants who specialize in auto retail.
Haig Partners LLC is a boutique investment banking firm and the leading buy-sell advisory firm to owners of higher value auto, heavy truck and RV dealerships. Since 1996, the principals at Haig Partners have completed almost 200 dealership transactions for almost 400 dealerships totaling over $5.5 billion, more than any other team in the industry. For more information, visit www.haigpartners.com.
SOURCE Haig Partners LLC