Profit levels are rising even with high inflation and increasing interest rates. This has prompted many dealerships to merge or completely acquire others. July was a hot month for dealership mergers and acquisitions, a trend we will likely continue to see for the next few months.
Some preliminary results of the Kerrigan Dealer Survey point in the direction that dealers are happy with their profit margins. Dealerships with less than three stores are also seeing little to no change, while dealerships owning over five physical locations continue to expand and merge with other companies.
First on this list for large mergers is Lithia Motors. In June, Lithia Motors purchased 9 dealerships from Lehman Auto World. Haig Partners LLC, a well-known buy/sell advisor represented the sell-side of the transaction. Now Lithia Motors owns 9 Lenham Auto World dealerships in the Miami area comprising Largo Honda, Doral Hyundai, Doral Kia, Doral Genesis, Lehman Subaru, Lehman Hyundai, Lehman Buick-GMC, Lehman Genesis, and Lehman Mitsubishi.
The owner of Lenham Auto World was ready and happy to sell the dealerships as he plans to retire. William “Bill” Lehman, Jr. took over his first dealership in 1967 which was owned by his father first. This strong acquisition is expected to bring in $850M in annualized revenue for Lithia.
Fox Motors is next on the list as this large company acquired three new dealerships in July from Ken Garff Automotive. Fox Motors is a Grand Rapids-based automotive group and now owns Cadillac of Novi, Southfield Chrysler Dodge Jeep RAM, and Taylor Chrysler Dodge Jeep RAM in the Detroit area.
The dealerships will operate with different names, excluding Cadillac of Novi. However, the Southfield Chrysler Dodge Jeep Ram is now the Chrysler Dodge Jeep RAM of Southfield. Taylor Chrysler Dodge Jeep also changes to Chrysler Dodge Jeep RAM of Taylor. To smoothen the transition, Fox Motors hired 250 Ken Garff Automotive employees.
Group 1 Automotive acquired three dealerships and a collision center in Louisiana this summer. The dealerships represent the Mercedes-Benz, Sprinter, Land Rover, Jaguar, and Volvo brands. Holmes European Motors was the previous owner of the dealerships and collision center.
Group 1 Automotive expects the acquisition of the dealerships to increase annual revenue by at least $110 million. The company also let go of two dealerships, selling their Hyundai franchise in Houston, Texas, and a Volkswagen franchise in Boston, Massachusetts.
Kerrigan Advisors represented Alan Jay Automotive Network when it sold its Alan Jay Toyota Sebring and Maserati & Alfa Romeo of St. Petersburg Florida dealerships. The two massive dealerships were sold to the Doherty Automotive Group of Lakeland and the Qvale Auto Group of West Palm Beach, Florida, respectively.
The Kerrigan Advisors team has now sold over 157 dealerships since they opened their doors in 2015. The Alan Jay Automotive Network is primarily located in Central Florida and owns and manages about 12 automotive brands. The sale of these three dealerships also marks the 12th and 13th dealerships sold by the Kerrigan Advisors team in the state of Florida.
Morrie’s Auto Group bought Forest Lake Chevrolet and Forest Lake Chrysler-Dodge-Jeep & Ram in Minnesota from dealer Randy Wilcox of Forest Lake Auto Group on July 1. Morrie’s considers the dealership one, but it technically is two including a separate facility for the Jeep franchise.
Kerrigan Advisors is honored to work with auto retailers throughout the US to enhance the value of their enterprise. Learn more about our services below:
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If you are a buyer in today’s market, Kerrigan Advisors welcomes the opportunity to learn about your acquisition criteria and include you in Kerrigan Advisors’ proprietary Buyer Database.
We welcome the chance to learn more about your acquisition criteria so that we can contact you in the event a client matches your investment profile.
Contact us to learn more about Kerrigan Advisors’ client services, or to have a conversation about the buy/sell market. All of our conversations are 100% confidential.