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Dealership Deals Run in the Fast Lane

Sales of automotive dealerships are in overdrive. That means Irvine-based sell-side advisory firm Kerrigan Advisors is enjoying life in the fast lane.
In late August, it helped owner Car Pros Automotive Group in Renton, Wash., hand over the keys to the Carson Kia dealership in Carson to Trophy Automotive Dealer Group in Glendale for an undisclosed sum, which industry sources pegged in excess of $50 million. The Carson dealership is a flagship for Kia Motors North America, whose operations are based in Irvine.

It’s also part of the highest-volume Kia dealership group in the U.S. since 2016, according to Kerrigan, which has brokered sales for more than 72 dealerships in three years representing over $1 billion in client sales.
The motor trend has arrived in Orange County, as well; property records and other reports show that more than $150 million worth of dealership properties have changed hands this year, the largest of those deals closing this summer.

Managing Director Ryan Kerrigan expects the pace to continue for the next five years.

“We’re seeing continued consolidation throughout our industry,” Kerrigan said. “In the last five years, there’s been an average of 200 transactions per year across the country.”

A big driver of the sales spike “is [that] the larger groups are finding cost efficiencies and successfully driving down costs relative to the smaller dealership groups,” he said.

In Orange County, two big auto dealerships traded hands this summer.
Orange Coast Acura, formerly South Coast Acura, sold to Costa Mesa- based Orange Coast Auto Group this month for an undisclosed price.
Orange Coast Auto now has six dealerships, all in Costa Mesa and along the city’s Harbor Boulevard hub of dealerships, including the just-purchased Acura site.

Meanwhile, BMW of Buena Park, formerly Shelly BMW, sold to Fort Lauderdale, Fla.-based auto retailer AutoNation Inc. in June for what knowledgeable sources said was $54 million.

Sales Traffic

While Car Pros Chairman and founder Ken Phillips sold Carson Kia as a step toward retirement, industry players are reporting that increasing industry consolidation is powering the increase in dealership sales traffic.
“Not every buyer would be willing to pay up for this kind of store because [Carson Kia] is overperforming so dramatically,” Kerrigan said. “However, there was significant interest on the part of larger dealership groups.”
Public companies, such as AutoNation (NYSE: AN), and Penske Automotive Group (NYSE: PAG) in Bloomfield Hills, Mich., are close to spending a record $1 billion on U.S. acquisitions this year.

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