Add Row 
Add 
Add Row 
Add Element 
Record Levels of Dealership Transactions: What’s Driving the Market?
The auto dealership buy/sell market has reached unprecedented heights in 2024, with a notable 10% increase from the previous year. According to the 2024 Annual Blue Sky Report by Kerrigan Advisors, a total of 697 franchises were sold, marking the highest number since 2021. This surge can be attributed to rising consumer confidence in auto retail sales and profitability, a sentiment reflected in the substantial pre-tax earnings amassed during the pandemic.
The Impact of Economic Trends on Dealership Success
Factors such as lower interest rates and a gradual moderation in inflation have bolstered the auto market, leading to a clear uptick in new vehicle sales. “New vehicle sales experienced a significant rebound throughout the year, as pent-up consumer demand was unleashed after years of constrained supply,” states Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. This favorable environment helps dealerships shake off the financial challenges they have faced and encourages a competitive marketplace.
Winners and Losers: The Great Franchise Divide
The reality is stark: dealerships are now segregated into “haves” and “have-nots.” Strong franchises, such as Lexus and BMW, have thrived on low inventories and high profit margins. Conversely, weaker franchises like Lincoln and Nissan are dealing with increasing inventories and declining valuations. This disparity has made it essential for dealers to diversify their franchises in order to thrive in this evolving landscape.
Challenges Ahead: Navigating a Fluctuating Market
Despite the optimism, dealerships must navigate significant challenges. Franchises that have seen reduced margins face pressure from increased floorplan costs and stagnant demand. The stark decline in valuations for underperforming franchises emphasizes the need for strategic planning and adaptability. As forecasted, this consolidation trend is expected to evolve in 2025, with continued mergers and acquisitions reshaping the marketplace.
The Bright Horizon: Opportunities for Dealership Growth
For dealership owners and GMs, understanding market dynamics becomes crucial for long-term success. With an anticipated consolidation trend, those who strategically position themselves, invest in technologies, and innovate in service offerings stand to gain the most. The 2024 buyer’s market signals a chance for savvy dealership owners to make informed decisions that elevate their positioning in a competitive industry.
Write A Comment