In today’s episode of Inside Automotive, we sit down with Ryan Kerrigan, Managing Director of Kerrigan Advisors, to discuss the fallout from OEMs’ aggressive EV push and the broader implications for the automotive industry. Kerrigan, a well-respected voice in retail automotive, shares his candid insights on the missteps in the EV rollout, the impact on OEMs and dealers, and what the future holds for the industry as it navigates these turbulent times.
Key Takeaways
1. Kerrigan critiques the centralized approach taken by OEMs, driven by mandates from Washington, D.C., which he argues is far removed from consumer demand and market realities. This top-down approach has led to significant financial losses and a lack of consumer interest in the aggressively rolled-out EV products.
2. The EV rollout, which saw OEMs invest over $100 billion domestically and $500 billion globally in R&D, has not met expectations. Kerrigan notes that this has resulted in shrinking EV markets and has placed OEMs in a difficult position as they struggle to balance public pronouncements with market realities.
3. Additionally, Kerrigan shares insights from a recent survey of OEM executives, revealing that over 80% are delaying their EV plans, with many discussing contingency plans to continue and extend ICE platforms. This indicates a significant shift in strategy as OEMs reconsider their aggressive EV timelines.
4. The interview touches on the material impact of the CDK issues on Q2 financial performance, with major players like Asbury and AutoNation reporting significant losses per share. This has contributed to a challenging financial quarter for the industry, highlighting the vulnerabilities of relying on key technology providers.
5. Nonetheless, Kerrigan discusses the broader economic trends, including rising interest rates and a slowing economy, and their implications for auto retail. He suggests that while the industry may face challenges in the near term, potential interest rate cuts in 2024 could offer some relief, making the outlook for auto retail cautiously optimistic.
"The EV push was driven by mandates far removed from the consumer and marketplace realities. We’re relearning the lesson that centralized decision-making doesn’t work in this industry." – Ryan Kerrigan.
Kerrigan Advisors is the leading sell-side advisor and thought partner to auto dealers nationwide. Since its founding in 2014, the firm has led the industry with the sale of over 280 dealerships representing $9 billion in client proceeds, including the third largest transaction in auto retail history – the sale of Jim Koons Automotive Companies to Asbury Automotive Group. 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. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, Kerrigan Advisors does not take listings, rather they develop a customized sales approach for each client to achieve their personal and financial goals. In addition to the firm’s sell-side advisory services, Kerrigan Advisors also provides a suite of consulting and investor 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 Dealer Survey, click here. To read the 2024 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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