Interview with Kinsel Motors

Joe Bob Kinsel and Craig Kinsel
August 15, 2023

"We researched who was the best in the industry. I know we made the correct move by choosing Kerrigan Advisors."

Craig Kinsel

President at Kinsel Motors, Inc.

The Kinsel family has been in the car business for more than 100 years in Texas, owning and operating dealerships throughout the state and ultimately, in 1944, settling in Beaumont with Toyota, Ford, Lincoln and Mazda (and at one time Porsche, BMW and Audi) stores. The Kinsel family decided to sell Kinsel Motors in 2023 to Houston-based Doggett Automotive Group. Kerrigan Advisors had the opportunity to interview Joe Bob Kinsel and his son and partner, Craig Kinsel, about their reasons for selling the family business, as well as their perspectives on the auto retail industry and its future.

What prompted you to sell your valuable dealerships in Southeast Texas in 2023?

Joe Bob Kinsel: We have been in the car business for four generations, and our family dynamics did not include a fifth generation taking over. After lengthy discussions with my three sons, this lack of a succession plan, coupled with market conditions and potential threats to the dealer model with electrification, led us to decide the timing was right for us to monetize the business.

Craig Kinsel: After four generations spanning 100 years, we decided the timing was right. We didn’t have a clear plan for a fifth generation to take over and had some concerns about the long-term future of the retail car business.

As a family-run business, what was the hardest part of the sale?

Joe Bob Kinsel: There were a lot of emotions involved in selling our more than 100-year-old business that has taken care of Kinsels for a long time. We underestimated how hard it would be and the fact that we were no longer going to be associated with our employees, who were the backbone of our business, and all the many customers who supported us tremendously over the years. We had to give this a lot of thought, knowing we would miss Kinsel Motors a great deal.

Craig Kinsel: Hands down, the most difficult part of this process was ending the long-term working relationships with our co-workers. We prided ourselves on having the best people in the business, and these same people helped put us in a great position to sell.

What surprised you about the sale process?

Joe Bob Kinsel: We were very pleasantly surprised by the professionalism and due diligence that went into selling our family business, which was quite different than our experience using other brokers over the years. There were no redacted balance sheets and income statements being tossed around. The thoroughness of the work completed by Kerrigan Advisors before going to market gave us great comfort, knowing we were in the right hands to move forward with a sale.

Craig Kinsel: We were surprised at how much work went into the due diligence part of the process. The Kerrigan team’s expertise on navigating this process made it extremely efficient and valuable in getting the deal done.

"There were a lot of emotions involved in selling our more than 100-year-old business that has taken care of Kinsels for a long time." — Joe Bob Kinsel

How do you feel the industry has changed in recent years relative to your 100-year history?

Joe Bob Kinsel: The process of selling a car has become more complicated because of federal and state regulations. We also have had to adapt to a broader customer base – younger people like to use technology because it is second nature to them. But that process doesn’t work for our older customers. Despite the increased complication and onset of technology, more things have stayed the same than have changed. We still have to sell each car, one at a time.

Craig Kinsel: Technology definitely has had a huge impact in the auto industry. It has made everything quicker and more transparent. I also believe that customers today demand a much-improved experience when dealing with a dealership, compared to the past.

Do you expect to see more consolidation in our industry?

Joe Bob Kinsel: Scale is playing a role in the dealership world these days with employee benefits, advertising and brick-and-mortar investments. Dealers, both public and private, have bigger balance sheets now than they ever have. With the cash they are sitting on, even with higher interest rates, they know the best way to put their money to work is to invest in a business they already know, love and understand. Consolidation will be fueled by strongly positioned private and public groups looking for economies of scale and strong returns.

Craig Kinsel: 100% yes. There will continue to be cycles, but I truly believe that big dealer groups will continue to grow by acquiring smaller groups.

What are your thoughts on how electric vehicles (EVs) will impact the auto-retail business model?

Joe Bob Kinsel: Clearly, the factories would become onlineonly if they had their way, and they would also take out the bargaining aspect of buying a car. If they are right on both of those counts, then the business model will fundamentally change with EVs. While I think that EVs are going to take over a chunk of new-car sales, I don’t think they’re going to be nearly as pervasive as the media and factories are saying. The factories’ EV plans are playing to the media, the public and Wall Street; they do not want to come across as “left behind.” You can witness this by the fight that Toyota has had recently, trying to defend their more conservative approach as opposed to the other OEMs. While I think EVs are here to stay, especially as technology improves, I don’t think EV sales are going to be as fast or prevalent as people are predicting.

Craig Kinsel: I think EVs are here to stay. With advancing technology, government help and increasing demand, the sale of EVs will continue to grow. However, I do not believe that the sales will grow at the rapid pace some predict. I believe that internal-combustion engines will continue to make up the majority of sales for the foreseeable future.

Where do you see dealership earnings normalizing – higher, lower or the same as earnings during the pandemic?

Joe Bob Kinsel: With more supply and higher floorplan expenses, dealers will need to pay closer attention to their operations and expenses to maintain post-pandemic earnings. I think that dealers who work hard, stay entrepreneurial and take care of customers and employees will do just fine in terms of profitability.

Craig Kinsel: I believe that earnings will normalize to pre-pandemic levels in the next few years.

Why did you choose Kerrigan Advisors to advise you in your sale?

Joe Bob Kinsel: My sons and I have all enjoyed reading Kerrigan’s quarterly Blue Sky Report® for years. It gave us a lot of confidence in monitoring the value of our main family asset and trends in the marketplace. When we entered into the process to sell, there was no other decision about who to contact. Kerrigan Advisors was a given. And our experience working with them exceeded all of our expectations. We would recommend that any dealer engage Kerrigan Advisors when contemplating a sale.

Craig Kinsel: It’s pretty simple, really: We researched who was the best in the industry. I know we made the correct move by choosing Kerrigan Advisors. I can’t say enough about how helpful and integral they were in getting us a great deal and being right by our side during the entire journey.

About Kerrigan Advisors

Kerrigan Advisors is the premier sell-side advisor and thought partner to auto dealers nationwide. The firm advises the industry's leading dealership groups, enhancing value through the lifecycle of growing, operating and, when the time is right, selling their businesses. Kerrigan Advisors has represented some of auto retail's largest transactions and advised more of the largest dealership groups in the US than any other buy/sell firm in the industry. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, the firm does not take listings, rather they develop a customized approach for each client to achieve their personal and financial goals. In addition to Kerrigan Advisors' sell-side advisory and capital raising services, the firm also provides a suite of consulting services including growth strategy, market valuation assessments, capital allocation, transactional due diligence, open point proposals, operational improvement and real estate due diligence.

Kerrigan Advisors monitors conditions in the buy/sell market and publishes an in-depth analysis each quarter in The Blue Sky Report®, which includes Kerrigan Advisors' signature blue sky charts, multiples, and analysis for each franchise in the luxury and non-luxury segments.—To download a preview of the report, click here.—The firm also releases monthly The Kerrigan Index™ composed of the seven publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail.—To access The Kerrigan Index™, click here.—To read the—2023 Kerrigan OEM Survey, click here.—Kerrigan Advisors also is the co-author of NADA's Guide to Buying and Selling a Dealership.

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Interview with Kinsel Motors
Joe Bob Kinsel and Craig Kinsel

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