‘Right time to get out’ triples car dealership sales

The COVID-19 pandemic, the rise of the agency retail model and new vehicle supply shortages have convinced many car retail bosses that now is a ‘right time to quit’. business, triggering a threefold increase in dealership sales.

That’s the verdict of car retail consultancy MotorVise, which has experienced first-hand the consolidation trend within the industry.

MotorVise said its specialty brokerage service is currently working with 20 dealerships to bring them to market as a result of the pandemic – a threefold increase in the past 24 months.

Managing Director Fraser Brown said: “I envision many more dealerships coming into the market over the next 18 months as the industry continues to negotiate a period of uncertainty.

“The challenges of the pandemic prompted some business owners to conclude that now was a good time to get out, while others wanted to get their money out to invest in other businesses.

“We’ve seen a three-fold increase in dealership sales since the start of 2020 as owners reassess the future and direction of their business.”

MotorVise’s experience in the industry mirrors that of UHY.

AM last week reported on the consultancy’s recently released Automotive Outlook 2022 report, which concluded that major UK car retail groups and PLCs would be joined by international investors and disruptors such than Cazoo and Constellation Automotive in what will likely be a banner year for mergers. and acquisitions.

Recent high profile M&A activity has seen Pendragon attract interest from major shareholder Hedin Group, while UHY noted Marshall’s acquisition of Motorline and Constellation Automotive’s subsequent move into car retailing franchisees through an offer to acquire PLC alongside a 19% stake in Lookers. big deals.

Commenting on the potential for a further acceleration in M&A activity in 2022, UHY’s report said, “We expect the number of deals to reach the highest levels seen in the past decade.”

MotorVise said the majority of car retail businesses coming to market are single-site or small-group dealerships, which are largely being bought up by larger rivals who are in a stronger position due to higher levels of profitability, greater economies of scale and better access to finance.

However, in a rapidly changing market, major retail companies are also restructuring, as evidenced by Arnold Clark’s recent exit from the Toyota and Ford franchises.

Regardless of scale, Brown said all retail bosses should seek the best possible financial terms when selling their business. He said: “Unfortunately, people who have built a business for many years can end up selling well below value.

“MotorVise recently worked with a dealership owner who was originally offered £200,000. In the end, we got five times that amount.

“Some owners may just want to divest themselves quickly and take the first offer, while others may not always recognize its true value.