We are experiencing some temporary issues. The market data on this page is currently delayed. Please bear with us as we address this and restore your personalised lists.
Haig Partners Releases Q3 2024 Haig Report®: Insights Reveal a Resilient Auto Retail Sector and an Evolving Buy-Sell Market
Business Wire
5 min read
FORT LAUDERDALE, Fla., November 21, 2024--(BUSINESS WIRE)--Haig Partners LLC has released its Q3 2024 Haig Report®, providing a comprehensive analysis of the trends shaping the automotive retail industry. Despite many challenges, including affordability concerns, interest rate pressures, and geopolitical uncertainties, U.S. auto dealers have continued to deliver strong financial performance, with profits per store remaining double pre-pandemic levels.
"The resilience of the auto retail industry is truly remarkable," said Alan Haig, President of Haig Partners. "Dealers have demonstrated time and again their ability to adapt, innovate, and thrive, even amidst substantial headwinds. While profits have declined from their pandemic-era highs, they remain well above historical norms, creating robust opportunities for those considering entering or exiting the industry."
Evolving Buy-Sell Market: Dealership M&A activity picked up in Q3, keeping 2024 on track for another record year. 92 rooftops traded hands, marking a 10% increase over Q2. Private dealers accounted for 96% of these acquisitions, signaling their confidence in the long-term profitability of the industry. Haig Partners is on track to close the sale of 60 dealerships in 2024, demonstrating the sustained strength of the auto retail buy-sell market.
Diverging Franchise Performance: Franchise performance has varied significantly, with brands like Toyota, Honda, and Lexus maintaining strong profitability while others, such as Stellantis and Nissan, face challenges. These divergences are influencing the valuation of dealerships, as high-performing franchises command premium prices, while underperforming brands offer opportunities for value-oriented buyers.
Declining Blue Sky Values: The average blue sky value, a critical measure of goodwill in dealership valuations, declined 12% from year-end 2023 but remains approximately double pre-pandemic levels. We believe the average estimated blue sky of a publicly owned franchised dealership was $21.3M in Q3 2024 and while conditions are normalizing, current market dynamics still favor sellers of strong-performing franchises.
Changing Average Blue Sky Multiples: Based on our team’s observations, research, and experience in evaluating dealerships, we made three changes to the franchise blue sky multiples and franchise dollar value ranges we publish every quarter. For Q3 2024, we made changes to Audi with a .25x reduction, Subaru with a .50x reduction, and an increase on Mazda by .25x.
Shifting Strategies Among Public Dealer Groups: Acquisitions slowed for public retailers in Q3 with the largest acquisition made by Lithia with the acquisition of 3 stores (Haig Partners represented Duval Motor Company on the sale). The average publicly owned dealership made an estimated $1.0M in pre-tax income, a 7% decrease from Q2 2024 and a 28% decrease compared to Q3 2023. Publicly traded auto retailers have scaled back acquisitions, focusing instead on optimizing existing operations and divesting non-core assets. This trend creates opportunities for private buyers to invest in dealerships at lower prices.
Positive Macroeconomic Indicators: Falling interest rates, moderating inflation, and steady GDP growth have bolstered consumer confidence, paving the way for improving vehicle affordability and a potential rebound in retail volumes.
Opportunities for Dealers Amid Change
"The buy-sell market is undergoing a healthy evolution," added Haig. "Sellers of strong franchises are securing values near their peaks, while value-conscious buyers are finding opportunities in underperforming brands. And there are plenty of brands in the middle that are slowly declining in value as profits normalize. Our mission at Haig Partners is to guide our clients through these transitions, maximizing the value of their life's work."
Our practice remains very busy. We are on track to sell around 60 dealerships in 2024, which would be our best year that includes setting records with the highest prices paid on many franchises. But also, our 10th anniversary as trusted buy-sell advisors to dealership owners nationwide. These milestones are about more than numbers—they reflect our unwavering commitment to the people behind the deals. We understand that selling a business isn’t just a transaction; it’s the culmination of years of dedication, vision, and hard work. Our team invests its collective experience and deep industry knowledge to deliver on our promise of maximizing the value of their life’s work. Behind every successful transaction is an immense amount of effort ensuring our clients achieve the outcomes they deserve. It’s a responsibility we take seriously. It’s a privilege to honor their life’s work.
About The Haig Report®
The Haig Report®, the longest-published quarterly report tracking trends in auto retail and their impact on dealership values, includes data and analysis on the performance of auto dealerships, discusses noteworthy events impacting the automotive retail industry, identifies trends in the M&A market for dealerships, provides guidance on estimated value ranges for different franchises and shares an outlook for the automotive retail buy-sell market. The Haig Report® is based on data gathered from reputable public sources and interviews with leading dealer groups and dealers, bankers, lawyers and accountants who specialize in auto retail.
About Haig Partners
Haig Partners is a leading buy-sell advisory firm that helps owners of higher-value auto, truck, RV and powersports dealerships maximize the value of their businesses when they are ready to sell. The team at Haig Partners has advised on the purchase or sale of more than 605 dealerships with a total value of over $11.9 billion. It has represented 28 dealership groups that qualify for the Top 150 Dealership Groups list published by Automotive News, more than any other firm. Clients of Haig Partners benefit from the group's collective experience as previous executives with leading companies such as Ally Financial, AutoNation, Bank of America, Credit Suisse, Deloitte, FORVIS, J.P. Morgan, the Sewell Automotive Companies and Toyota Financial Services. Leveraging its unmatched expertise and extensive relationships, Haig Partners guides clients to successful outcomes through a confidential and customized sales process. The firm authors The Haig Report®, the leading industry quarterly report that tracks trends in auto retail and their impact on dealership values, and co-authors NADA’s Guide, "Buying and Selling a Dealership." Haig Partners team members are frequent speakers at industry conferences and are regularly quoted in reputable media outlets, including Reuters, Forbes, The Wall Street Journal, The New York Times, CNBC, BBC, Automotive News, Wards, CarDealershipGuy and CBT News. For more information, visit https://www.haigpartners.com.
