Tuesday, 15 December 2020 21:28

Dealership Buy/Sell Market on Pace for New Record

Written by Auto Remarketing Staff


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Here’s potentially a positive record on pace to be set during this tumultuous year.

Kerrigan Advisors reported Dec. 14 that the dealership buy/sell market continued to soar during the third quarter, putting it on track to surpass record transaction numbers established in 2015.


And with a flurry of mega dealer transactions and high dealership earnings, the firm’s Third Quarter 2020 Blue Sky Report also highlighted that blue-sky values shot to unprecedented levels during the quarter, too.


“As we predicted, there was no softening of this record-breaking market,” Erin Kerrigan, Kerrigan Advisors founder and managing director, said in a news release.


“A 94% year-over-year rise in dealership earnings in Q3 was driven by higher vehicle gross profit margins, reduced operating expenses, limited inventory (which drove up prices) and increased operational efficiency,” Kerrigan continued. “This created a perfect storm for a white-hot buy/sell environment, one that we predict will surpasses the historic levels of 2015.”


Kerrigan Advisors indicated 73 dealership buy/sell transactions were completed during Q3, pushing the total to 186 transactions for the first nine months of the year.


That figure represents a 15.5% increase above...

...the amount recorded during the first nine months of 2019, according to data from The Banks Report, Automotive News and Kerrigan Advisors’ research.


Despite periods of retail disruption due to COVID-19, Kerrigan pointed out that 2020 thus far has achieved the highest level of transaction activity since 2015.


“Of particular note were the high numbers of multi-dealership transactions completed in Q3, including mega dealer transactions, representing 25% of the buy/sell market for the first nine months of the year. We expect this trend to continue into 2021,” said Kerrigan, whose firm advised on the sale of 22 dealerships during the past quarter.


According to the Blue Sky Report, public and private dealership valuations exceeded prior highs.


We thank Auto Remarketing for reprint permission.


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