
The Soaring Dealership Buy/Sell Market
The auto dealership market is running at full throttle, as revealed by the latest insights from the Third Quarter 2024 Blue Sky Report by Kerrigan Advisors. In the first nine months of the year, a staggering 330 dealership transactions were completed, representing 544 franchises being snapped up. This marks a 93% surge from pre-pandemic levels in 2019, signaling a historic high and redefining industry landscape dynamics.
Strategies Fueling the Surge
Key players are capitalizing on robust blue-sky values while offloading weaker franchises. Dealership giants are keen to leverage their impressive balance sheets and solid relationships with banks to broaden their scale, as noted by Erin Kerrigan, founder of Kerrigan Advisors. Dealers can now benefit from lucrative after-tax proceeds, compelling more sellers to enter the market, tapping into the wealth they have gathered since the pandemic.
Market Share and Future Outlook
Big dealership groups are not just surviving; they are thriving, expanding their market share considerably. Over five years, the top 150 dealership groups have expanded their hold by 5%, now claiming 30% of the U.S. market. If the pace continues, the largest groups may dominate industry revenues by 2043, presenting both opportunities and challenges for smaller players seeking relevance in the rapidly consolidating field.
Unique Benefits of Knowing This Information
For dealership owners and GMs, understanding these trends can guide strategic decisions, particularly in anticipating valuable acquisition opportunities. Gleaning insights into the evolving dealership market dynamics helps align business objectives with industry shifts, equipping dealerships to maintain competitiveness and capitalize on growth opportunities.
Future Predictions and Trends
Looking ahead, 2025 is expected to bring about significant changes driven by the need for expensive image upgrades, particularly within luxury import franchises. With stronger balance sheets, larger groups are ready to elevate their buy/sell market share further. As dealerships brace for these transformations, staying proactive in strategy development will be critical to thriving in this fast-evolving landscape.
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