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 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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