Dealership Valuations Dip from 2022, but Remain High, Experts Say

Written by:
Gail Kachadourian Howe and Julie Walker
January 26, 2024

Despite a decline in dealership value through the first three quarters of 2023, valuations are still about two times higher than pre-COVID figures.

While average dealership valuations through the first three quarters of 2023 dipped slightly from the same period the year before, they remain well above pre-pandemic levels, buy-sell experts told Automotive News.

Kerrigan Advisors' third-quarter Blue Sky Report found valuations for the average dealership through the first nine months of 2023 fell 5.4 percent compared with the same period in 2022 but were still about two times higher than they were before the pandemic. Kerrigan declined to provide the average dealership valuation dollar figure.

Erin Kerrigan, managing director of Kerrigan Advisors, a sell-side firm in Incline Village, Nev., said while she expects some continued decline in dealership valuations in 2024, the drop won't be too steep and may be around 15 percent for dealerships with less demand, such as those in smaller markets.

"I think valuations in my experience, particularly for high-demand assets, are pretty resilient," Kerrigan told Automotive News. "Those dealerships that are in high-demand markets, like Florida and Texas, are still seeing record valuations."

Kerrigan Advisors represented the sellers in the sale of three dealerships in May to Group 1 Automotive Inc. that fall into that category, as both are high-volume stores and located in Texas.

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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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