Do you want to sell your car dealer? Why might now be the best time

Do you want to sell your car dealer?  Why might now be the best time

What do you need to know if you want to buy or sell your dealership in today’s automotive market? Today to Inside Automotive, we welcome Alan Haig, president and founder of Haig Partnersto preview the . to share Q1 Haig Report and discuss the current buy-sell market.

The Haig report tracks automotive retail trends and how they affect dealer valuations. In the first quarter report, margins continued to improve for new vehicles, doubling from the prior year. The profit from used cars fell slightly. F&I and fixed activities also increased. These factors lead to exceptional dealer values.

Dealer prices reached an absolute last quarter and show no signs of slowing down. Strong dealer profits and robust buyer demand have pushed multiples and values ​​to new heights. For families thinking about leaving the company, Haig says the rise in values ​​offers them opportunities to quit earlier. Given the inflation rate of 8%, the auto industry is a great sector to invest in now if you have extra cash on hand. OEMs are also continuing to push back on their production timelines, and Haig thinks it will take about three and a half years to meet pent-up demand, meaning auto dealerships are likely to remain highly profitable.

However, the possibility of a recession looms amid other economic factors such as interest rate hikes, rising gas prices and the Russian invasion of Ukraine. These economic factors tend to drive the auto industry, but due to the semiconductor shortage and lack of manufacturing, Haig doesn’t think it will have a serious impact as we expect. In this case, the industry can skip the effects altogether. According to Haig, the pent-up demand is also driving a significant increase in fixed business. Because consumers can’t find new vehicles to buy, they stick with the cars they have for much longer.

Let’s say you are interested in selling your dealership and maximizing the value of their business. In that case, you should take the time to put together an information package that clearly describes the investment opportunity for the buyer. Doing this step will give you a better price for your store. Recently, Haig Partners oversaw two transactions where the owners attempted to sell their business on their own and were unhappy with their offers. In one case, an owner received an offer that was 30% higher after putting together a package with Haig Partners. The other was 50% higher.

Other factors a consultant can help with include responding to due diligence questions, curbing if a buyer is unreasonable, and handling complex operational questions.

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