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The KAR Index™: Is Historic Upcycle for Auto Retail Stocks Over?

New index from Kerrigan Advisors tracks the seven auto retail publics to identify and assess the drivers impacting changes in their valuations, with implications for both public and private auto retailers

IRVINE, Calif.--(BUSINESS WIRE)--Kerrigan Advisors today announced the inaugural release of the KAR Index™ (The Kerrigan Auto Retail Index), a new monthly index for the auto retail industry covering the seven publicly traded auto retail companies with operations focused on the US market. The index is designed to help auto retailers understand the true value of their dealerships, while also providing key insights into factors influencing the valuations of these public companies, with broader implications for the auto industry as a whole.

As reported in the KAR Index™, while auto retail stocks have experienced a historic seven-year up cycle – the index rose 968% from 2008 to 2015, outpacing the S&P in the same time frame by 784% - the KAR Index™ shows a significant drop in recent months.

“It is still too early to call the end of the cycle, but the public markets have clearly voted with their feet, driven by widespread concern about a slowing economy and concern about future profitability,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors.

Kerrigan Auto Retail Index highlights include:

  • The period spanning 2008 to 2015 represents a historic up-cycle for auto retail stocks, underlining the incredibly strong growth and profitability of these companies during this time period.
  • From a low of 66.43 in November 2008 to its high in June 2015, the KAR Index rose a stunning 968%, outpacing the S&P in the same time frame by 784%.
  • The KAR Index™ has dropped in recent months from its high of 709.27, down 33.7% to 470.12 as of February 29, 2016.

“The auto retail industry remains highly fragmented and is influenced by thousands of small and mid-sized private companies, the seven publicly traded auto retail stocks provide a special insight into the dynamics affecting auto retail,” said Erin Kerrigan, Managing Director of Kerrigan Advisors. “These stocks are 'marked to market' every day with the cumulative data and wisdom available to those investing. For the vast majority of auto dealers who will only come to market one time and discover the true value of their dealership, we believe there is value in understanding the drivers that influence these valuations.”

Kerrigan Advisors also releases The Blue Sky Report™ four times a year and includes Kerrigan Advisor’s signature blue sky charts, multiples and analysis for each franchise in the luxury and non-luxury segments. The multiples are based on Kerrigan Advisors’ view of franchise values in the current buy/sell market and can be applied to adjusted pre-tax dealership earnings to estimate blue sky value. To download the Blue Sky Report, click here.

Kerrigan Advisors market analysis will be showcased during Erin Kerrigan’s keynote at the J.D. Power 2016 Auto Summit March 31, 2016 at the Wynn Hotel in Las Vegas, NV.

Erin Kerrigan is Managing Director of Kerrigan Advisors, and is a recognized industry expert on dealership valuation, real estate and buy/sells. A sought after commentator on automotive retailing topics ranging from consumer auto buying trends to auto retail consolidation to private equity in auto retail, she has keynoted numerous automotive conferences and her analysis has appeared in publications such as Automotive News and the Wall Street Journal.

About Kerrigan Advisors

Kerrigan Advisors is a national dealership buy/sell advisory firm focused on providing a high level of client service for dealership sellers. Led by a team of veteran advisors who have represented transactions totaling over $2 billion dollars in automotive, private equity and investment banking, Kerrigan Advisors customizes each sale process to maximize the seller’s transaction proceeds. With the most comprehensive buyer database in the industry, Kerrigan Advisors has the industry context and expertise to match each seller with the right buyer.

Each quarter, Kerrigan Advisors publishes The Blue Sky Report™, a Kerrigan Quarterly, which is the auto industry's most comprehensive and authoritative quarterly report and analysis of dealership buy/sell activity and franchise values. Kerrigan Advisors’ Managing Director Erin Kerrigan, who authors the report, is a recognized industry expert on dealership valuation, real estate and buy/sells, and is a frequent speaker at leading auto retail events and conferences, including NADA, JD Power Automotive Roundtable, AICPA, NADC and Driving Sales’ President’s Club. She has also been a keynote speaker for events hosted by American Honda Motor Company, Audi of America, US Trust, Ohio Automobile Dealer Association, and SunTrust Bank and has led webinars for NADA and Automotive News. Her expertise is also featured in a monthly column for Dealer Magazine.

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