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

If you are looking to buy or sell your dealership in today’s automotive retail market, what do you need to know? Today on Inside Automotive, we are pleased to welcome back Alan Haig, President and Founder of Haig Partnersto share a preview of the Haig T1 Report and discuss today’s buy-sell market.

The Haig Report tracks automotive retail trends and their impact on dealer ratings. In the first quarter report, margins continued to rise for new vehicles, doubling what they were year over year. Used car profits are down slightly. M&I and fixed transactions also increased. These factors lead to exceptional dealership values.

Dealer prices hit a record high last quarter and show no signs of slowing down. Strong dealer profits and strong buyer demand pushed multiples and values ​​to new highs. For families considering leaving the business, Haig says the rise in values ​​gives them the opportunity to leave sooner. Given the 8% inflation rate, the automotive sector is a great industry to invest in right now if you have extra cash. OEMs also continue to push back their production deadlines, and Haig estimates it will take about three and a half years to catch up with pent-up demand, meaning auto dealerships will likely remain highly profitable.

However, the possibility of a recession looms amid other economic factors like rising interest rates, rising gasoline prices and Russia’s invasion of Ukraine. These economic factors usually drive the auto industry, but due to semiconductor shortages and lack of production, Haig doesn’t think it will have as severe an impact as expected. In this case, the industry could completely ignore the effects. According to Haig, pent-up demand is also driving a significant increase in fixed operations. Because consumers can’t find new vehicles to buy, they cling to cars they’ve had longer.

Suppose you want to sell your dealership and you want to maximize the value of its business. In this case, you need to take the time to put together a set of information that clearly defines what the investment opportunity is for the buyer. This step will get a better price for your store. Recently, Haig Partners oversaw two transactions where the owners attempted to sell their businesses independently and were unhappy with their offers. In one case, an owner received a 30% higher offer after securing a package deal with Haig Partners. The other was 50% higher.

Other factors an advisor can help with are answering due diligence questions, pushing back if a buyer is being unreasonable, and dealing with complex operational issues.

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