Big Car Dealer Groups Buying Up More Franchised New Car Dealerships
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Editor's Note: Cheap Money Don't Hurt
The AIADA newsletter reported that some of the nation’s biggest auto dealer chains are betting in the most direct way that some of the changes in auto retailing since the COVID-19 pandemic are here to stay.
As a result many big auto dealer chains are buying up other dealerships at a record pace, according to firms that broker dealership mergers and acquisitions.
Forbes reports that there’s a widespread expectation among the dealership buyers that high prices and low discounts are the new order of things, driven by a relative scarcity of product, and not just a temporary blip.
The record pace of dealership buyouts shows that the big groups expect dealership profitability to get even better. In a recent dealer survey, Erin Kerrigan, co-founder of Kerrigan Advisors, Irvine, Calif, said that 79 percent of dealer respondents said they expect profits to increase in the next 12 months.
Kerrigan predicted a record number of at least 350 dealership transactions nationwide in 2021, representing more than 600 franchises. Through the third quarter, she said transactions in 2021 were up 21 percent vs. a year ago.