Sale of Houston's high volume Chevrolet dealership highlights strong buyer demand for dealerships in Texas, the nation's second fastest growing market; marks Kerrigan Advisors’ 280th dealership sale, and 19th Texas franchise sold since 2023

Houston, TX – November 25, 2024 – Kerrigan Advisors, the premier sell-side advisor and thought partner to auto dealers nationwide, represented Conroe, Texas-based Buckalew Chevrolet in its sale to Victoria, Texas-based Keating Auto Group, ranked 17th in Automotive News’ Top 150 Dealership Group list. The completion of this transaction represents Kerrigan Advisors’ 280th dealership transaction since the firm’s founding in 2014, and its 19th Texas franchise sold since 2023. Notably, Kerrigan Advisors leads the Houston buy/sell market, having represented on the sale of 11 franchises in the market in the last 18 months.

Buckalew Chevrolet was founded by Don A. Buckalew and his partner in 1965 and has been a cornerstone of the Conroe community for nearly 60 years. The dealership is known for supporting numerous local organizations, including schools (the local elementary school is named Buckalew Elementary), sports leagues, churches and non-profits throughout Montgomery County. Don’s sons, Donnie and Denny Buckalew, took over management and ownership of the dealership over the last decade, growing operations to become the 17th highest volume Chevrolet dealership in the state of Texas.  

“The Kerrigan Advisors team managed every step of the sale process for us to ensure all of our goals were achieved in this once-in-a-generation milestone for our family,” said Donnie Buckalew, Co-Owner of Buckalew Chevrolet. “Kerrigan’s guidance and deep knowledge of the Texas buyer community were invaluable to me and my brother. We could not have done it without them.” Denny Buckalew, Co-Owner, continued, “Finding a buyer who prioritized community involvement and customer and employee satisfaction was a top priority for us. We are pleased that Kerrigan identified a buyer in Keating that shares our value system, laying the foundation for the dealership’s continued success.”

“It was a great privilege and honor to represent the Buckalew family in the sale of their highly valuable dealership. Buckalew Chevrolet is a pillar of the Conroe community, so it was imperative that we found a buyer who would ensure the Buckalew family’s legacy of community service and impeccable customer relations would continue,” said Erin Kerrigan, Founder & Managing Director of Kerrigan Advisors. “The Keating Auto Group met all of our expectations for an ideal buyer. We are grateful for the opportunity to support Donnie and Denny in this important family milestone."

Chevrolet ranks as the top domestic brand, leading in quality and dealer relations. In 2024, J.D. Power ranked Chevrolet #2 overall and #1 among domestic brands in its Initial Quality Study, outperforming its domestic peers by 20%. Chevrolet’s U.S. light vehicle sales surged 19.5% in 2023, further widening Chevrolet’s lead over domestic competitors. Thanks to its practical approach to facility and EV requirements, Chevrolet also ranks high in dealer relations, topping the 2023 Kerrigan Dealer Survey for valuation expectations in 2024.  

Houston is one of the most sought-after car markets by today’s dealership buyers, largely driven by its ranking as one of the largest and fastest growing U.S. metro areas. Houston is anchored by sizeable corporations and deep roots in the trade, technology, healthcare, defense, energy and space industries, and home to approximately 50% of Texas’ 55 Fortune 500 companies. It has the fifth largest population in the US, growing 23% since 2010, the second fastest rate of the 10 largest metro areas. Of the five largest counties in Houston, Montgomery County, where Buckalew is based, is the fastest growing since 2020. Additionally, Houston has been named the #1 Best Big City to Live by US News & World Report in 2024, and the #1 Best Place for Foreign Businesses by the Financial Times in 2023.

“This transaction is another example of the power of a valuable brand, in a rapidly growing metro area, in a state, Texas, that is at the forefront of dealership buyer demand,” said Ryan Kerrigan, Managing Director at Kerrigan Advisors. “The sale of Buckalew Chevrolet marks the 19th transaction Kerrigan Advisors has shepherded to completion in Texas since May of 2023, solidifying our position as the leading sell-side advisor to Texas dealers. It was an honor and a privilege for our team to work with the Buckalew family and their team in bringing this transaction to such a successful conclusion.”

Kerrigan Advisors leads the Texas dealership buy/sell market, having represented Kinsel Motors (Toyota, Ford, Mazda and Lincoln in Beaumont), Beck & Masten Auto Group (Buick GMC & Kia in Houston and Corpus Christi), Alamo Toyota in San Antonio, Tejas Toyota in Houston, Northwest CDJR in Houston, Cowboy Toyota in Dallas and now Buckalew in Houston.

About Kerrigan Advisors

Kerrigan Advisors is the leading sell-side advisor and thought partner to auto dealers nationwide. Since its founding in 2014, the firm has led the industry with the sale of 280 dealerships representing $9 billion in client proceeds, including the third largest transaction in auto retail history – the sale of Jim Koons Automotive Companies to Asbury Automotive Group. The firm advises the industry’s leading dealership groups, enhancing value through the lifecycle of growing, operating and, when the time is right, selling their businesses. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, Kerrigan Advisors does not take listings, rather they develop a customized sales approach for each client to achieve their personal and financial goals. In addition to the firm’s sell-side advisory services, Kerrigan Advisors also provides a suite of consulting and investor services including growth strategy, market valuation assessments, capital allocation, transactional due diligence, open point proposals, operational improvement and real estate due diligence.

Kerrigan Advisors monitors conditions in the buy/sell market and publishes an in-depth analysis each quarter in The Blue Sky Report®, which includes Kerrigan Advisors’ signature blue sky charts, multiples, and analysis for each franchise in the luxury and non-luxury segments. To download a preview of the report, click here. The firm also releases monthly The Kerrigan Index™ composed of the seven publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail. To access The Kerrigan Index™, click here. To read the 2023 Kerrigan Dealer Survey, click here. To read the 2024 Kerrigan OEM Survey, click here. Kerrigan Advisors also is the co-author of NADA’s Guide to Buying and Selling a Dealership.

Kerrigan Advisors Media Contact:

Melanie Webber (melanie@mwebbcom.com), mWEBB Communications, 949-307-1723

204 transactions, representing a record 381 franchises, were completed in the first half of 2024, according to the Second Quarter 2024 Blue Sky Report® by Kerrigan Advisors; activity was largely driven by an increase in sellers seeking to capture strong blue sky values and well-capitalized buyers

Incline Village, NV – September 9, 2024 – The auto dealership buy/sell market experienced an all-time record in the first half of 2024, with 204 completed dealership transactions representing 381 franchises sold, according to the just-released Second Quarter 2024 Blue Sky Report® by Kerrigan Advisors. At this rate, transaction activity is nearly double pre-pandemic levels and annualizing at 760+ franchises sold, a new industry milestone.

This heightened activity was largely driven by an increase in sellers coming to market seeking to capture historically strong blue sky values, which remain above pre-pandemic levels for most franchises, up on average 74% according to The Kerrigan Blue Sky Index. Present and future technology and data management challenges, particularly after the CDK cyberattack, are leading more dealers to consider a sale in the near term. These sellers are met by very well-capitalized buyers, driving the velocity of second quarter’s buy/sell market.

“The 2024 buy/sell market remains robust, hitting new records as industry consolidation continues unfazed by high interest rates, the market headwinds of low vehicle affordability and anemic EV sales,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “Consolidators still flush with cash from pandemic earnings and current cash flow are getting deals done with sellers looking to lock in today’s elevated values and avoid the potential risk of further valuation degradation.”

Kerrigan noted that for most franchises, dealership sellers recognize current blue sky prices are highly attractive on a historical basis, though down on average 17% from their peak. This reduction is largely a result of the sustained decline in industry earnings since 2022. On a trailing twelve month basis through June 2024, the publics’ average dealership earnings dropped 35% compared to 2022’s peak, resulting in average dealership earning of $4.4 million. Adjusting for the one-time impact of the CDK outage, Kerrigan Advisors estimates dealership earnings are beginning to stabilize, approaching a more normalized post-pandemic level that is nearly double pre-pandemic averages.

Buyers Seeking High Quality, Low Risk Franchises

With earnings normalizing and continued strong cash flow generation, the top consolidators have amassed record amounts of liquidity since the pandemic. By way of example, the publics currently have access to $7.4 billion of capital, up $370 million from the first quarter of 2024. Despite earnings stabilization and record liquidity in the market, buyers are more selective on franchises and locations, and are increasingly flocking to the highest quality, lowest risk franchises, often paying a meaningful premium for top franchises in high-demand markets. By contrast, weaker franchises, especially those with declining sales and ballooning inventory, are experiencing tepid buyer demand and a shrinking share of buyer capital.

“The more than 100 days’ supply chasm between the top and bottom franchises is separating the buy/sell market into the haves and have nots,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “Additionally, buyers are increasingly focused on the potential negative impact of OEMs’ EV strategies and are hesitant to invest in manufacturers who are overcommitted to EV production. Toyota and Lexus, who have projected the lowest level of EV production at 18%, remain the most sought-after franchises today.”

Second Quarter 2024 Buy/Sell Trends

For the second quarter of 2024, Kerrigan Advisors identified the following four trends that the firm expects will impact the buy/sell market into 2025:

·        Publics deploy more capital outside the US due to attractive international pricing

·        OEMs play an increasingly active role in managing their networks and buy/sells

·        Acquisition financing contracts for weaker franchises

·        Technology challenges lead more dealers to consider a sale in the near term

Kerrigan Advisors has observed OEMs taking a more active and, in some cases, aggressive role in the buy/sell process and dictating the explicit makeup of their dealer network deploying right of first refusals (“ROFRs”) at an increasing rate.

“We’ve seen some OEMs brazenly attempt, unsuccessfully, to employ a ROFR in states where the tactic is explicitly disallowed by franchise law,” said Erin Kerrigan. “The OEM’s goal is often to supplant a seller’s selected buyer with a designated, favored dealer, resulting in further concentration of dealership ownership in the hands of the most dominant industry consolidators. This does not enhance the diversity of an OEM’s network. Most troubling, in some cases OEMs are deciding to ignore franchise laws in a buy/sell, a highly concerning precedent which emboldens other OEMs eschew auto retailers’ hard-fought legal protections meant to preserve a dealer’s blue sky market value.”

In many regards, this shift in OEM mentality is a byproduct of Tesla’s initial retail success with the direct-to-consumer model and their exclusive ownership of the customer relationship and data. In Kerrigan Advisors 2024 OEM Survey, 19% of OEMs surveyed plan to exclusively own the customer relationship and data in five years, a 16% increase from 2023, while just 14% expect dealers to retain sole ownership, a dramatic shift from historical precedent, when the dealers owned the customer facing relationship.

“Though OEMs have largely abandoned the agency model concept, some are attracted to the idea of a consolidated retail network with more standardization and greater retailing control of the customer experience,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. 

Kerrigan Advisors has also noted a trend in the contraction of bank lending to US corporations as a percentage of overall US GDP as loan terms become more onerous, significantly impacting commercial real estate and acquisition financing. Lending standards are becoming more challenging for certain franchises as lenders analyze the risk of higher inventory levels and slower sales rates.

Lastly, Kerrigan Advisors expects implementation of technology in the sale process and the need for data-driven retailing operations will lead to more dealers considering a sale in the near term. For many of the largest dealer groups, technology in retailing can dramatically increase employee productivity and ultimately enhance profitability. But private dealers lack a sufficiently large enough organization and staff to develop and deploy their own proprietary technology solutions. This, combined with the recent CDK global cyberattack and its significant operational repercussions have added further stress to the technology challenges faced by private dealers, prompting some to consider a sale.

 “Some dealers choose to sell rather than reengineer their business toward a digital future as they recognize the need for a larger organization with the scale to hire an entire IT team, including a top-level executive focused on deploying data to enhance sales. Lower revenue operations will inherently struggle to compete in an increasingly data-driven industry,” continued Ryan Kerrigan.

Mazda Multiple Increased, CDJR and Nissan Multiples Decreased

For the second quarter of 2024, Kerrigan Advisors made three blue sky multiple adjustments, increasing the blue sky multiple for Mazda and decreasing the multiples for CDJR and Nissan.

Kerrigan increased Mazda’s high-end blue sky multiple to 3.75 from 3.5 due to improved buyer sentiment of the brand. Mazda continues to gain market share with well-designed products and the support of its ongoing captive relationship with Toyota Financial Services. While its current days’ supply of inventory is above market, Mazda is focused on supporting its dealers to increase sales and subsequently reduce days’ supply. The brand’s sales target for 2024 was revised up to 450,000, an impressive 24% increase from its 2023 sales of 363,000. Most importantly, sales per franchise have risen steadily since 2019 and hit a record level through the trailing twelve months as of June 2024.

In the case of CDJR, Kerrigan Advisors reduced the franchises’ blue sky multiples on the high-end to 3.5 and on the low-end to 2.5. Some lenders are currently unwilling to finance CDJR acquisitions and dealers are beginning to terminate the franchise, in part due to the exploding inventory carrying cost. As further evidence of CDJR’s declining blue sky value, Asbury Automotive Group has taken impairment charges against many of its CDJR franchises in 2024.

Kerrigan Advisors also reduced Nissan’s blue sky multiple this quarter on the low-end to 2.5. Demand for the Nissan franchise continues to decline due to steeply-reduced profits and poor product offerings. According to Automotive News, Nissan dealers’ return on sales has declined to 1% from 2.3% last year and net profit has declined 70%. The franchise is also considered over-dealered with a declining sales per dealership.  

Kerrigan Advisors’ Franchise Multiple Outlooks Upgraded for Honda and Ford, Reduced for Mercedes-Benz and Hyundai

For the second quarter of 2024, Kerrigan Advisors upgraded its outlook for Honda from Steady to Positive and Ford’s outlook to Steady from Negative.

Demand for Honda franchises is on the rise as sales per franchise rebounds and inventory production remains disciplined. Also, fewer buyers are concerned about Honda’s EV partnership with Sony given weak EV market demand. In the case of Ford, the OEM has acknowledged its overly optimistic projections on EV sales and rolled back the Model E dealer requirements. Ford sales are outperforming the other domestic franchises in 2024, and buyers are showing more interest in the franchise, which could result in an increased blue sky multiple, particularly if inventory days’ supply improves from its currently high levels.

Kerrigan Advisors also lowered its outlook for both Mercedes-Benz and Hyundai to Negative from Steady. Mercedes’ EV products are struggling in the marketplace, resulting in high inventory levels and low margins. Amongst the top luxury franchises, Mercedes has the highest overall days’ supply of vehicles (33% higher than BMW and 159% higher than Lexus). Mercedes’ declining luxury market share is creating a wider lead for Lexus and BMW. In addition, Mercedes-Benz’s decision to take a more aggressive approach to structuring its dealer network, including identifying select preferred buyers and exercising its ROFR is beginning to limit the franchise’s buyer pool and could reduce its blue sky value in the future. Likewise, Hyundai’s aggressive position regarding buy/sell approvals, particularly the OEM’s desire to hand-select preferred dealers in each region, coupled with the franchise’s expensive facility requirements and Hyundai’s higher than average days’ supply, are resulting in lower buyer demand for Hyundai franchises.

Highlights from the Q2 2024 Blue Sky Report® by Kerrigan Advisors include:

·        204 buy/sell transactions were completed through the trailing twelve months as of June 2024, representing 381 franchises, an all-time record for the period.

·        The recently introduced Kerrigan Blue Sky Index, a barometer of industry franchise value, is 74% higher than 2019 levels, though down 17% from 2023.

·        55 multi-dealership transactions were completed in the first half of 2024, representing 27% of the buy/sell market.

·        The Kerrigan Index™ through July 2024 was up 56% from 2022’s low, and sits just 16% below its all-time high, with three of the public US dealer groups (Asbury, AutoNation and Group 1) reaching all-time record market capitalizations in July 2024

·        Import luxury buy/sell market share rose to 40% in the first half of 2024, up from 27% in 2023, and domestic buy/sell market share declined to 44% compared to 2023 full year results of 54%.

·        As of the second quarter of 2024, average front-end gross margins on new vehicles have leveled off, just 3% lower than the first quarter of 2024.

·        94% of the franchises sold in the first half of 2024 were to private buyers who are leading industry consolidation. The largest private groups represented 37% of the buy/sell market, while smaller private groups represented 56%. The US public dealer groups acquired 7% of franchises sold in the first half of 2024.

·        The US public dealer groups’ estimated blended average blue sky multiple has increased 62% in the last four quarters to 6.3x.

The Blue Sky Report®, published by Kerrigan Advisors, is the auto retail industry's most comprehensive and authoritative quarterly report on dealership M&A activity, as well as franchise values. The quarterly report, received by over 11,000 industry recipients in 35 countries, includes analysis of all dealership transaction activity for the year, and lays out the high, average and low blue sky multiples for each franchise in the luxury and non-luxury segments. For more details and to preview the report, click here. To sign up to receive the quarterly report, click here.

Kerrigan Advisors also releases monthly The Kerrigan Index™ composed of the seven publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail. To access The Kerrigan Index™, click here.

About Kerrigan Advisors

Kerrigan Advisors is the leading sell-side advisor and thought partner to auto dealers nationwide. Since its founding in 2014, the firm has led the industry with the sale of over 275 dealerships representing nearly $9 billion in client proceeds, including the third largest transaction in auto retail history – the sale of Jim Koons Automotive Companies to Asbury Automotive Group. The firm advises the industry’s leading dealership groups, enhancing value through the lifecycle of growing, operating and, when the time is right, selling their businesses. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, Kerrigan Advisors does not take listings, rather they develop a customized sales approach for each client to achieve their personal and financial goals. In addition to the firm’s sell-side advisory services, Kerrigan Advisors also provides a suite of consulting and investor services including growth strategy, market valuation assessments, capital allocation, transactional due diligence, open point proposals, operational improvement and real estate due diligence.

Kerrigan Advisors monitors conditions in the buy/sell market and publishes an in-depth analysis each quarter in The Blue Sky Report®, which includes Kerrigan Advisors’ signature blue sky charts, multiples, and analysis for each franchise in the luxury and non-luxury segments. To download a preview of the report, click here. The firm also releases monthly The Kerrigan Index™ composed of the seven publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail. To access The Kerrigan Index™, click here. To read the 2023 Kerrigan Dealer Survey, click here. To read the 2024 Kerrigan OEM Survey, click here. Kerrigan Advisors also is the co-author of NADA’s Guide to Buying and Selling a Dealership.

Kerrigan Advisors Media Contact:

Melanie Webber (melanie@mwebbcom.com), mWEBB Communications, 949-307-1723

Sale of #2 volume Buick GMC dealership in strong auto retail market reinforces continued demand for dealerships in the South; transaction marks Kerrigan Advisors’ 277th dealership sale, 85th since 2020 in the Southern region

MEMPHIS, TN – August 28, 2024 – Kerrigan Advisors, the premier sell-side advisor and thought partner to auto dealers nationwide, represented Memphis, Tennessee-based Sunrise Auto Group in the sale of its remaining dealership, Sunrise Buick GMC Covington Pike, to Memphis-based Jim Keras Automotive. The completion of this transaction represents Kerrigan Advisors’ 277th dealership transaction, including 85 in the Southern region since 2020.

“We are proud to have completed the final sale in Bob Berkheimer’s group of high-performing dealerships,” said Gabe Robleto, Senior Vice President, Sell-Side Advisory at Kerrigan Advisors. “Collaborating with Bob and his team on the sale of all three of his dealerships has been a privilege, and we are gratified that we were able to find the ideal buyer for this final dealership, bringing his legacy with Sunrise Automotive to a successful close.”

Bob Berkheimer founded Sunrise Auto Group more than three decades ago. As a multi-year recipient of GM’s prestigious Mark of Excellence and Dealer of the Year awards, Sunrise is a market leader for Buick GMC in Memphis, which is ranked the third largest metro area in the Southeast and is home to notable Fortune 500 companies including Federal Express, AutoZone and International Paper. Buick GMC Covington Pike is located in Shelby County, which makes up 67% of metro’s population and is the #2 highest volume Buick GMC dealership in Memphis. Jim Keras Automotive Group operates six dealerships across Tennessee and Missouri, representing a range of brands including Chevrolet, Nissan, Subaru and CDJR.

“With the completion of this transaction, I want to thank Kerrigan Advisors for shepherding our group’s entire sale process with great care and attention,” said Bob Berkheimer, President of Sunrise Auto Group. “I also want to extend my heartfelt gratitude to our employees and the Memphis community for their loyalty to our dealerships over the past few decades. I am thrilled we found such a strong fit for our Covington Pike dealership community in Jim Keras Automotive.”

Buick GMC is the premier domestic brand in Tennessee given its strong lineup of nearly a dozen SUVs and trucks and its expected pipeline and boasts strong overall market share in the state. In 2023, Buick GMC was the top performing domestic brand for new unit sales growth and the brand was a top performer in the 2023 Kerrigan Dealer Survey for franchise valuation expectations in 2024.

“We were honored to be chosen by Bob to complete the final sale of the Sunrise Auto Group collection of dealerships,” said Erin Kerrigan, Founder & Managing Director of Kerrigan Advisors. “This transaction marks our 85th transaction in this region since 2020, which reflects a continued regional focus towards the business-friendly, high growth markets in the South. Based on our analysis, we expect the strength in the Southern buy/sell market to continue, and we were proud to support Bob on this highly successful transaction.”

Tennessee’s high-growth status is driven by its business-friendly approach and favorable tax laws. Tennessee’s GDP has surged an impressive 85% since 2010, outpacing the US growth rate by 25%. In 2021, the state achieved a remarkable milestone of 10 years of new business growth, and it ranked #3 in America’s Top States for Business by CNBC. Notably, Memphis residents benefit from a lower cost of living, which attracts residents and businesses to the region.

Stephen Dietrich and Brooke Sizer of Holland & Knight served as legal counsel to the seller. James W. Cameron III and Jonathon D. Mason of Cameron Worley, P.C. served as legal counsel for the buyer.

About Kerrigan Advisors

Kerrigan Advisors is the leading sell-side advisor and thought partner to auto dealers nationwide. Since its founding in 2014, the firm has led the industry with the sale of over 275 dealerships representing nearly $9 billion in client proceeds, including the third largest transaction in auto retail history – the sale of Jim Koons Automotive Companies to Asbury Automotive Group. The firm advises the industry’s leading dealership groups, enhancing value through the lifecycle of growing, operating and, when the time is right, selling their businesses. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, Kerrigan Advisors does not take listings, rather they develop a customized sales approach for each client to achieve their personal and financial goals. In addition to the firm’s sell-side advisory services, Kerrigan Advisors also provides a suite of consulting and investor services including growth strategy, market valuation assessments, capital allocation, transactional due diligence, open point proposals, operational improvement and real estate due diligence.

Kerrigan Advisors monitors conditions in the buy/sell market and publishes an in-depth analysis each quarter in The Blue Sky Report®, which includes Kerrigan Advisors’ signature blue sky charts, multiples, and analysis for each franchise in the luxury and non-luxury segments. To download a preview of the report, click here. The firm also releases monthly The Kerrigan Index™ composed of the seven publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail. To access The Kerrigan Index™, click here. To read the 2023 Kerrigan Dealer Survey, click here. To read the 2024 Kerrigan OEM Survey, click here. Kerrigan Advisors also is the co-author of NADA’s Guide to Buying and Selling a Dealership.

Kerrigan Advisors Media Contact:

Melanie Webber (melanie@mwebbcom.com), mWEBB Communications, 949-307-1723

Sale of leading domestic brand in high-growth market highlights ongoing buyer demand in the Southern region; transaction represents the 276th dealership sold by Kerrigan Advisors since inception and 70th franchise sold year-to-date

ATLANTA, GEORGIA– August 13, 2024 – Kerrigan Advisors, the premier sell-side advisor and thought partner to auto dealers nationwide, represented Atlanta-based Asbury Automotive Group (NYSE: ABG) in the sale of Nalley Chevrolet in Union City, a suburb of Atlanta, Georgia, to ALM Automotive Group. This transaction represents Kerrigan Advisors' 276th dealership sold since inception and 70th franchise sold year-to-date.

Asbury Automotive Group is one of the largest automotive retailers in the United States, with $14.8 billion in revenue reported in 2023 derived from 155 dealerships and 37 collision centers, located in 15 states. The Nalley Chevrolet dealership is located in a high-volume auto mall represented by 18 brands in Union City, a southern suburb of Atlanta experiencing strong population growth. The buyer, ALM, was established in 2006 with a focus on providing high quality pre-owned vehicles in Atlanta and has since expanded to fourteen locations around Georgia and South Carolina with seven franchise locations, representing (2) Kia, (2) Hyundai, Nissan, Ford and Stellantis.

“As we continued to look for opportunities to make changes to our portfolio, we knew we wanted to partner again with Kerrigan Advisors on this sale, especially given their deep experience and expertise, both in the buy/sell market and in the Southern region,” said David Hult, CEO, Asbury Automotive Group. “Thank you to all our Nalley Chevrolet employees and customers over the years. We know that Nalley Chevrolet is in good hands with the team at ALM.”

“We were pleased to work again with the very impressive Asbury team in this sale," said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. "We continue to see robust buyer demand in the South, especially in high growth markets and, with Chevrolet as the top domestic brand, there was high demand for this dealership. Having represented more than 80 franchises sold in the region since 2020, Kerrigan Advisors was well positioned to lead this transaction on behalf of Asbury and are pleased the transaction had such a successful outcome.”

Atlanta is a top growth market in the US and ranks as the #1 “Best Place to Live” by Money Magazine. Atlanta’s economy has grown 32% in just five years, bolstered by the 17 Fortune 500 companies headquartered there, the 3rd largest concentration in the US. Chevrolet ranked #4 for vehicle quality by J.D. Power in 2023, growing sales by 13% in 2023, outpacing other domestic brands including Ford (+7.5%) and CDJR (-1.2%). The brand’s strength is fueled by a high-quality product lineup of trucks and SUVs, which continue to yield strong gross margins.

“We were honored to have been chosen to work on this divestiture with Asbury and appreciate the trust they placed in us,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “This transaction underscores the ongoing strength of the buy/sell market for robust franchises in economically thriving areas like Atlanta.”

About Kerrigan Advisors

Kerrigan Advisors is the leading sell-side advisor and thought partner to auto dealers nationwide. Since its founding in 2014, the firm has led the industry with the sale of over 275 dealerships representing nearly $9 billion in client proceeds, including the third largest transaction in auto retail history – the sale of Jim Koons Automotive Companies to Asbury Automotive Group. The firm advises the industry’s leading dealership groups, enhancing value through the lifecycle of growing, operating and, when the time is right, selling their businesses. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, Kerrigan Advisors does not take listings, rather they develop a customized sales approach for each client to achieve their personal and financial goals. In addition to the firm’s sell-side advisory services, Kerrigan Advisors also provides a suite of consulting and investor services including growth strategy, market valuation assessments, capital allocation, transactional due diligence, open point proposals, operational improvement and real estate due diligence.

Kerrigan Advisors monitors conditions in the buy/sell market and publishes an in-depth analysis each quarter in The Blue Sky Report®, which includes Kerrigan Advisors’ signature blue sky charts, multiples, and analysis for each franchise in the luxury and non-luxury segments. To download a preview of the report, click here. The firm also releases monthly The Kerrigan Index™ composed of the seven publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail. To access The Kerrigan Index™, click here. To read the 2023 Kerrigan Dealer Survey, click here. To read the 2024 Kerrigan OEM Survey, click here. Kerrigan Advisors also is the co-author of NADA’s Guide to Buying and Selling a Dealership.

Kerrigan Advisors Media Contact:

Melanie Webber (melanie@mwebbcom.com), mWEBB Communications, 949-307-1723

Gempton brings nearly two decades of automotive experience, including 13 years at AutoNation leading acquisitions and divestitures for the company; will expand Kerrigan Advisors’ footprint with the opening of a new office in Miami, Florida

Miami, FL   August 12, 2024 – Kerrigan Advisors, the leading sell-side advisory firm and thought partner to auto dealers in the US, today announced that Chris Gempton has joined the firm as Senior Vice President, Sell-Side Advisory. Gempton brings nearly two decades of automotive experience, including 13 years at AutoNation (NYSE: AN), where he most recently served as Vice President of Corporate Development. Gempton will open Kerrigan Advisors’ Florida office in Midtown Miami to serve Kerrigan Advisors’ clients in the southeastern US, which continues to be a very active market for dealership buy/sell transactions.

In Gempton’s most recent role as the head of corporate development at AutoNation, he led all acquisitions and divestitures for the company. During his tenure, he oversaw nearly $3 billion in transactions across 130+ dealerships representing more than $5 billion in revenue. Prior to AutoNation, Gempton began his career as a CPA serving the auto retail industry for MBAF (recently acquired by BDO) and PricewaterhouseCoopers.

“We are beyond thrilled that Chris chose to join the Kerrigan Advisors team, further expanding our presence in Florida, an area that continues to capture record valuation as referenced in our Q1 2024 Blue Sky Report,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors, which has represented on the sale of more than 275 dealerships since inception. “With the addition of Chris, Kerrigan Advisors further cements its status as the leading sell-side advisor in the industry, bringing the team’s collective transaction experience to nearly $12 billion.”

“Chris had many options for his next career move,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “We are proud he chose Kerrigan Advisors. Chris will be an exceptional member of our team and a perfect fit for our collaborative culture of excellence. His vast transaction experience and leadership of AutoNation’s corporate development group brings tremendous benefits to our growing firm and our clients.”

“Working with Kerrigan Advisors during my time at AutoNation was always a stellar experience,” said Chris Gempton. “Recognized as industry experts, and known industry-wide for their tremendous track record and Blue Sky Report®, the firm has always stood out for its professionalism, attention to detail and exceptional client service. I look forward to joining the team and contributing to their continued success.”

Founded in 2014, Kerrigan Advisors is the premier sell-side advisor and thought partner to auto dealers in the US, leading the industry in proceeds per transaction and representing transactions of nearly $9 billion in the last decade, more than any firm in the industry.

About Kerrigan Advisors

Kerrigan Advisors is the leading sell-side advisor and thought partner to auto dealers nationwide. Since its founding in 2014, the firm has led the industry with the sale of over 275 dealerships representing nearly $9 billion in client proceeds, including the third largest transaction in auto retail history – the sale of Jim Koons Automotive Companies to Asbury Automotive Group. The firm advises the industry’s leading dealership groups, enhancing value through the lifecycle of growing, operating and, when the time is right, selling their businesses. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, Kerrigan Advisors does not take listings, rather they develop a customized sales approach for each client to achieve their personal and financial goals. In addition to the firm’s sell-side advisory services, Kerrigan Advisors also provides a suite of consulting and investor services including growth strategy, market valuation assessments, capital allocation, transactional due diligence, open point proposals, operational improvement and real estate due diligence.

Kerrigan Advisors monitors conditions in the buy/sell market and publishes an in-depth analysis each quarter in The Blue Sky Report®, which includes Kerrigan Advisors’ signature blue sky charts, multiples, and analysis for each franchise in the luxury and non-luxury segments. To download a preview of the report, click here. The firm also releases monthly The Kerrigan Index™ composed of the seven publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail. To access The Kerrigan Index™, click here. To read the 2024 Kerrigan OEM Survey, click here.  To read the 2023 Kerrigan Dealer Survey, click here.  Kerrigan Advisors also is the co-author of NADA’s Guide to Buying and Selling a Dealership.

Kerrigan Advisors Media Contact:

mWEBB Communications

Melanie Webber (melanie@mwebbcom.com), mWEBB Communications, 949-307-1723

2024 Kerrigan OEM Survey finds OEMs expect sales to increase and earnings to normalize at higher levels over the next 12 months, despite high interest rates and affordability challenges; majority of OEMs developing ICE production contingency plans as electric vehicle (“EV”) demand softens and EV sales expectations wane

Incline Village, NV – July 29, 2024 – Automotive OEMs are generally optimistic about the health of the automotive industry over the next 12 months, with the vast majority expecting new vehicle sales to increase or remain the same versus 2023, according to the just-released 2024 Kerrigan OEM Survey.

The survey, gathered from Kerrigan Advisors’ annual survey of automotive OEM executives in conjunction with the issuance of The Blue Sky Report®, is designed to gauge OEM executives’ perspectives on the franchise system, dealer profitability and electric vehicle sales. The 2024 results indicate that despite high interest rates and consumer affordability challenges, the industry is amid a normalization period, in which dealership sales, profits and inventories are moderating, likely at more attractive levels than the pre-pandemic period. Strikingly, the survey reveals significant challenges with the industry’s transition to EVs, with 81% of OEMs expecting the transition to be slower than originally forecast.

“Our second annual survey of OEM executives provides a critical window into their unique perspectives of the automotive industry. The survey offers a candid, on-the-ground view of auto retail’s opportunities and challenges in the near and medium term,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “The results underscore the continuing evolution of the auto retail marketplace, particularly regarding the demand challenges associated with EVs. It is interesting to see that most OEMs are making contingency plans for increased ICE production and admitting their EV sales projections will not be met. Even with the EV miscalculations, we are pleased to see that executives have a largely positive outlook on the auto retail industry, expecting rebounding new vehicle sales and gross margins to remain above pre-pandemic levels for the foreseeable future.”

Dealership Profits, Sales, Margins and Inventories Reflect Improving Outlook

Only 54% of OEM executives surveyed expect dealership profitability to decline in the next 12 months, compared with 69% in 2023. Consistent with this improved outlook, 41% of OEMs expect profits to remain the same over the next 12 months, versus just 24% who had that expectation last year. As with 2023, a slim minority project dealership earnings to increase in the near-term. These results are an indication that auto retail profits are beginning to normalize for many franchises.

Despite high interest rates and consumer affordability challenges, 44% of OEMs expect new vehicle sales to increase over the next 12 months, while 48% project sales will remain at 2023 levels, only 8% expect a decline. This sales optimism is likely a byproduct of rising new vehicle inventory expectations, with 70% projecting days’ supply to normalize between 60 and 90 days, up from 38% in 2023.  

“We are in the midst of auto retail’s great normalization. After years of historically high dealership profits, new vehicle inventories are rebounding and gross profit margins are on the decline,” continued Erin Kerrigan. “That said, we are pleased to see the majority of OEM executives do not expect a return to pre-pandemic gross profit margins. In fact, an increasing number of executives predict dealership earnings will flatten in 2024 - an indication OEMs do not intend to return to a period of overproduction and excess inventories.”

EV Transition Remains Slow, Impacting OEM Decisions

In addition to the vast majority who anticipate a slower transition to EVs, over two-thirds of OEMs surveyed project that they will not meet their proposed EV sales goals, with 86% reporting they are developing contingency ICE production plans if EVs do not penetrate the market as successfully as expected. These results are consistent with the declining sales growth in EVs – through June 2024, EV sales growth is down 84% compared to 2023.

The failure of OEMs to meet their projected EV sales is also driving substantial modifications to their expected changes to the auto retail model: over half of OEM respondents do not expect the agency model to be introduced in the US in the next five years, a dramatic shift from the only 24% who were skeptical in 2023. The survey also reveals a major change related to anticipated increases in facility requirements, with 60% expecting no increase in requirements over the next five years, and only 18% projecting an increase, compared to 32% in 2023. Additionally, while OEMs are more supportive of the dealership legacy sales model, a rising number expect to take a leading role in the customer relationship and data ownership. The majority (67%) expect the customer relationship and data will be shared by OEMs and dealers in the future, though 19% (a 16% increase from 2023) believe the OEM will exclusively own the customer relationship and data. Just 14% of respondents project the legacy model, in which the dealer is the primary owner of the customer relationship, will remain. These results demonstrate the OEMs’ continued desire to have more direct management of the customer relationship.

“As our survey makes clear, the industry’s transition to EVs will be much slower than originally projected and OEMs are preparing necessary contingency plans for increased ICE and hybrid production to meet consumer demand,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “This has also led to a pullback in OEMs’ changes to the retail sales model and facility requirements, with some, such as Ford, abandoning their plans to take a more active role in retailing and recognizing the dealer network is the most economic and efficient sales model. That being said, as our survey indicates, executives still believe the customer relationship and data is squarely in their future domain. The 2024 Kerrigan OEM Survey cements the industry’s expectation that change is the only constant.”

Key OEM Survey Data

·        46% project profits will stay the same or increase in the next 12 months, while 54% expect a decline in the next 12 months an improvement from 69% in 2023.

·        62% expect new car margins to normalize above 2019 levels, while only 38% believe they will return to 2019 levels,

·        44% say new vehicle sales will increase over the next 12 months, 48% project sales will remain at 2023’s levels and 8% expect a decline.

·        Days’ supply of new vehicles is expected to normalize at 60-90 days in the next 12 months say 70% of respondents, up from 38% in 2023. 22% project days’ supply to remain within 30-60 days in the next 12 months, down from 59% in 2023.

·        81% of OEM executives believe the transition to EVs will be slower than originally planned.

·        64% do not expect to meet their EV sales goals, prompting 86% of respondents to reveal their organizations are developing contingency ICE production plans if EVs do not penetrate the market as expected. 

·        67% expect customer relationship/data will be shared by OEMs and dealers in the future, although 19% (a 16% increase from 2023) believe OEMs will exclusively own the data. 14% of respondents say the dealer will be the primary owner.

·        Only 18% of respondents projected an increase in facility requirements over the next 5 years, while 60% believe they will remain the same, and 22% anticipate a decline.

Methodology

The data for The Kerrigan OEM Survey was gathered from Kerrigan Advisors’ annual survey of automotive OEM executives in conjunction with the issuance of The Blue Sky Report®. The survey is based on over 110 responses from OEM executives in Kerrigan Advisors’ proprietary database. Responses were collected from December 2023 to June 2024.

·        To download the full Kerrigan OEM Survey report, click here.

·        To download a preview of The Blue Sky Report®, published by Kerrigan Advisors, click here. 

·        To access The Kerrigan Index™, click here.

·        To access results from the latest Kerrigan Dealer Survey, click here.

About Kerrigan Advisors

Kerrigan Advisors is the leading sell-side advisor and thought partner to auto dealers nationwide. Since its founding in 2014, the firm has led the industry with the sale of over 275 dealerships representing more than $9 billion in client proceeds, including the third largest transaction in auto retail history – the sale of Jim Koons Automotive Companies to Asbury Automotive Group. The firm advises the industry’s leading dealership groups, enhancing value through the lifecycle of growing, operating and, when the time is right, selling their businesses. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, Kerrigan Advisors does not take listings, rather they develop a customized sales approach for each client to achieve their personal and financial goals. In addition to the firm’s sell-side advisory services, Kerrigan Advisors also provides a suite of consulting and investor services including growth strategy, market valuation assessments, capital allocation, transactional due diligence, open point proposals, operational improvement and real estate due diligence.

Kerrigan Advisors monitors conditions in the buy/sell market and publishes an in-depth analysis each quarter in The Blue Sky Report®, which includes Kerrigan Advisors’ signature blue sky charts, multiples, and analysis for each franchise in the luxury and non-luxury segments. To download a preview of the report, click here. The firm also releases monthly The Kerrigan Index™ composed of the seven publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail. To access The Kerrigan Index™, click here. To read the 2023 Kerrigan Dealer Survey, click here.  Kerrigan Advisors also is the co-author of NADA’s Guide to Buying and Selling a Dealership.

Kerrigan Advisors Media Contact:

Melanie Webber (melanie@mwebbcom.com), mWEBB Communications, 949-307-1723

Dealership buy/sell transactions increased to a record 403 in the trailing twelve months as of March according to the First Quarter 2024 Blue Sky Report® by Kerrigan Advisors, driven by a rise in the number of sellers coming to market, providing buyers more options for capital deployment

Kerrigan Advisors introduces the Kerrigan Blue Sky Index

Incline Village, NV – June 24, 2024 – The auto dealership buy/sell market experienced another record quarter with 109 completed dealership transactions completed in the first quarter of 2024 representing 233 franchises sold, up 38% compared to the first quarter of 2023, according to the just-released First Quarter 2024 Blue Sky Report® by Kerrigan Advisors. This was driven by an increase in the number of sellers coming to market, without a concomitant rise in buyers, transitioning the 2024 buy/sell market in favor of buyers for the first time since the pandemic. At this pace, Kerrigan Advisors expects the 2024 buy/sell market to exceed 400 transactions.

“The 2024 buy/sell market remains robust, hitting new records despite high interest rates and declining industry profitability,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “This burgeoning buyers’ market is putting additional downward pressure on blue sky values, particularly as dealership earnings retreat further from their pandemic-induced high. As earnings trend downward, more private dealers are deciding to exit, particularly while their blue sky valuations remain above pre-pandemic levels.”

Through the first quarter of 2024, Kerrigan Advisors estimates average dealership earnings declined 7%, resulting in average industry net to sales of 4.5%, 2.2 percentage points below 2022’s peak. Much of the earnings decline is a result of softening new vehicle margins, which ended the quarter 35% lower than 2022, due to increasing new vehicle inventories.

Kerrigan Advisors Launches the Kerrigan Blue Sky Index

In order to track industry valuation fluctuations since 2019, Kerrigan Advisors has launched the Kerrigan Blue Sky Index, which reflects changes in average industry blue sky values each quarter. For the first quarter of 2024, the Kerrigan Blue Sky Index declined 7% from the fourth quarter of 2023; however, the index remains 80% higher than 2019.

“We are pleased to introduce the Kerrigan Blue Sky Index as a barometer for automotive retail and blue sky values. We hope the index becomes a helpful tool to dealers as they assess fluctuations in their franchise values,” continued Erin Kerrigan. “While the Kerrigan Blue Sky Index is down this quarter, there are exceptions to this broader industry trend. Top import franchises in economically vibrant markets continue to achieve record valuations in today’s buy/sell market, particularly franchises in Texas and Florida.”

The Kerrigan Blue Sky Index is bolstered by Kerrigan Advisors’ industry leading sell-side advisory experience and transaction completion volume: 273 dealership transactions completed since 2014 representing over $8 billion in client proceeds. The Index is benchmarked at 100 on December 31, 2019, and will be adjusted for changes to average industry blue sky values each quarter. 

2024 Earnings Considered the New Normal, Blue Sky Multiples Reverting to Historical Mean

During the pandemic there was an inverse relationship between the US public dealer groups’ quarterly earnings and blue sky multiples. Wall Street correctly assumed industry earnings would skyrocket after the fourth quarter of 2020, and publics were trading at an eight multiple. When earnings reached their peak in 2022, Wall Street again correctly estimated profits would normalize at lower levels and thus assumed a low blue sky multiple of 2.9 times peak earnings.  

“With industry earnings now normalizing at a more sustainable level, blue sky multiples are reverting to the historical mean, reflecting a return to valuation based on current industry performance, which better reflects future expectations,” continued Erin Kerrigan.

2024 Buy/Sell Trends

For the first quarter of 2024, Kerrigan Advisors identified the following three trends that the firm expects will meaningfully impact the buy/sell market this year:

·        Private dealers tap into outside equity partners to accelerate growth through acquisition

·        Captive finance companies increasingly critical to franchise profits and value

·        Fixed operations drives industry profits and blue sky

Kerrigan Advisors expects outside capital to continue to increase its investment in auto retail and to identify exceptional operators to financially support. Through 2023, the number of dealerships owned by private groups with outside capital is up 45% from 2021. When annualizing first quarter 2024 data, the average dealership achieved an impressive 23% return on equity, outperforming the S&P 500 by 110% and on average, auto retail returns have outperformed the overall S&P 500 by 92% on an annual basis since 2016. Clearly, auto retail has proven its case and will draw more capital from outside the industry as consolidation accelerates.

“With these kinds of impressive investment returns outside capital investors, including family offices, high net worth individuals and private equity firms, are actively seeking increased financial exposure to the industry,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “Many of these sophisticated investors are attracted to the tremendous consolidation opportunity presented by auto retail’s highly fragmented structure. As of the end of 2023, just 24% of dealerships were owned by the top 150 dealership groups, representing 30% of industry sales.”

Growth limitations placed on the largest dealership groups as a result of OEM framework agreements are also fueling outside capital’s interest in auto retail because they result in a less competitive acquisition marketplace for well-funded buyers.

As the auto retail market becomes increasingly competitive in 2024, franchises that have strong support from their captive finance company will outperform in sales, profit and, ultimately, value, predicts the report. Captives not only finance consumer vehicles, but they also often finance blue sky in a buy/sell transaction, so there is often a correlation between higher blue sky values and a stronger and more supportive OEM captive finance company. In 2023, captives represented 61% of new vehicle financing, a 23% increase from 2022. Going forward, Kerrigan Advisors expects these financial institutions will play a more impactful role not only in vehicle financing, but also in franchise value and the buy/sell market.

Lastly, Kerrigan Advisors expects fixed operations (service and parts) to drive industry profits and blue sky values in 2024. Fixed operations, which is a major contributor to dealership earnings, yields the highest profit margin in the business and its sales growth has outpaced vehicle sales for the last two years. Ultimately, dealerships with the strongest fixed operations and high fixed absorption rates are less reliant on cyclical vehicle sales, making their projected future earnings more reliable and leading to higher blue sky values.

Toyota and BMW Multiples Increased

For the first quarter of 2024, Kerrigan Advisors increased the multiples for Toyota and BMW as both OEMs continue to effectively and strategically play the industry’s transition to new powertrains with successful rollouts of hybrid EV models. Toyota is now leading the industry in hybrid sales with 37% market share in the first quarter, resulting in a 21% increase in total vehicle sales, outperforming the industry by 279%. Kerrigan increased Toyota’s multiple .25 to a range of 6.75 to 7.5.

“As a reflection of Toyota’s dominant position in the market, the company’s share price surged in the first quarter of 2024 as Tesla's has declined since the summer of 2023, validating Toyota’s measured approach to the EV transition,” said Erin Kerrigan. “It’s not surprising that buyer demand for Toyota franchises has increased, resulting in higher blue sky multiples as profit growth expectations for the brand continues to outperform the overall industry.”

In the case of BMW, its highly effective rollout of the EV versions of its popular ICE vehicles resulted in a continuation of the OEM’s leadership position in total luxury sales in 2024. BMW ended the quarter as one of the fastest selling brands, according to Edmunds, with a 31-day turnover rate of inventory in March. BMW’s success managing the evolving luxury market, particularly with EVs, further secures their position as the luxury US leader, resulting in increased buyer demand for the franchise. Kerrigan increased BMW’s multiple .25 to a range of 7.25 to 8.75.

Negative Outlook for Stellantis

For the first quarter of 2024, Kerrigan Advisors reduced its outlook for Stellantis. CDJR continues to underperform the industry in terms of sales, despite an overabundance of inventory. As a clear indication of weak buyer demand, Stellantis franchises in strong growth markets are seeing sharp declines in blue sky values, separating itself from the other two domestic franchises which are seeing greater stability in the market. As a result, Kerrigan lowered its outlook for Stellantis to negative and its blue sky multiple range from 3.0 to 3.75.

Highlights from the Q1 2024 Blue Sky Report® by Kerrigan Advisors include:

·        109 dealership transactions were completed, resulting in 233 franchises sold, a 38% increase from the first quarter of 2023 and a new record.  

·        Dealership earnings continue to decline from their pandemic-induced highs, although they are still 97% above 2019 levels.

·        Top import franchises in economically vibrant markets continue to capture record valuations, particularly in Texas and Florida. Buyer demand for these rare assets remains strong due to sustained levels of above average profitability supported by robust population growth. 

·        In the first quarter of 2024, import non-luxury franchises outperformed domestics in new vehicle sales growth, increasing by 12.5%, more than double that of the total market. Domestic sales declined 0.8%, with average days’ supply ballooning to 105 days, driving a decline in domestic new vehicle gross margins.

·        Import luxury buy/sell market share rose 145% in the first quarter of 2024 to 27%, up from 11% in 2023 and domestic buy/sell market share declined 35% compared to 2023 full year results.

·        As a result of enhanced adoption of data-driven systems and technology, including AI, the Top 150 Largest Dealership Groups expanded their share of the overall used vehicle market to 10% in 2023.

·        The US public dealer groups’ average blue sky multiple reached 5.3x at the end of the first quarter of 2024, a 47% increase from 3.6x a year ago, driving a dramatic increase in acquisition spending (totaling $1.19 billion in the first quarter of 2024).

·        By leveraging enhanced customer acquisition strategies, innovative technology and AI, the publics’ advertising expense per new vehicle retailed is 34% lower than the estimate for the US public dealer groups’ average.

The Blue Sky Report®, published by Kerrigan Advisors, is the auto retail industry's most comprehensive and authoritative quarterly report on dealership M&A activity, as well as franchise values. The quarterly report, received by over 11,000 industry recipients in 35 countries, includes analysis of all dealership transaction activity for the year, and lays out the high, average and low blue sky multiples for each franchise in the luxury and non-luxury segments. For more details and to preview the report, click here. To sign up to receive the quarterly report, click here.

Kerrigan Advisors also releases monthly The Kerrigan Index™ composed of the seven publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail. To access The Kerrigan Index™, click here.

About Kerrigan Advisors

Kerrigan Advisors is the leading sell-side advisor and thought partner to auto dealers nationwide. Since its founding in 2014, the firm has led the industry with the sale of over 270 dealerships generating more than $8 billion in client proceeds, including the third largest transaction in auto retail history – the sale of Jim Koons Automotive Companies to Asbury Automotive Group. The firm advises the industry’s leading dealership groups, enhancing value through the lifecycle of growing, operating and, when the time is right, selling their businesses. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, Kerrigan Advisors does not take listings, rather they develop a customized sales approach for each client to achieve their personal and financial goals. In addition to the firm’s sell-side advisory services, Kerrigan Advisors also provides a suite of consulting and investor services including acquisition and expansion strategies, valuation assessments and benchmarking, open point proposals and real estate advisory.

Kerrigan Advisors monitors conditions in the buy/sell market and publishes an in-depth analysis each quarter in The Blue Sky Report®, which includes Kerrigan Advisors’ signature blue sky charts, multiples, and analysis for each franchise in the luxury and non-luxury segments. To download a preview of the report, click here. The firm also releases monthly The Kerrigan Index™ composed of the seven publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail. To access The Kerrigan Index™, click here. To read the 2023 Kerrigan Dealer Survey, click here. To read the 2023 Kerrigan OEM Survey, click here. Kerrigan Advisors also is the co-author of NADA’s Guide to Buying and Selling a Dealership.

Kerrigan Advisors Media Contact:

Melanie Webber (melanie@mwebbcom.com), mWEBB Communications, 949-307-1723

Sale of the top selling brand in San Antonio and Houston highlights buyers continued interest in leading franchises in high-growth markets; transaction represents the 17th franchise sold by Kerrigan Advisors in Texas in the last 12 months

San Antonio & Houston, TX – June 18, 2024 – Kerrigan Advisors, the premier sell-side advisor and thought partner to auto dealers nationwide, represented the Toomey family in the sale of Alamo Toyota in San Antonio, Texas to Shottenkirk Auto Group and Tejas Toyota in Houston, Texas to Vaughan Automotive. With the completion of these transactions, Kerrigan Advisors has represented on the sale of 47 Toyota/Lexus dealerships since 2014 (14 in the last 12 months) and 17 Texas-based franchises in the last year, making the firm the leading sell-side advisor in the state.

“My family is proud of our legacy of successfully representing Toyota in the great state of Texas for over five decades,” said John Toomey, Co-Owner, Alamo Toyota and Tejas Toyota. “We are incredibly grateful for the years of loyalty and support we’ve received from the Houston and San Antonio communities, as well as our employees and our customers. While the time was right for our family to sell our stores, it was certainly a difficult decision. We will greatly miss the business and our business family and look forward to seeing the dealerships thrive under new ownership with the Shottenkirk and Vaughan organizations.”

“This was a bittersweet decision for our family to sell; however, we were very grateful to be working with Kerrigan Advisors whose sensitivity to our needs matched their incredible strategic expertise in the industry,” said Richard Toomey, Co-Owner, Alamo Toyota and Tejas Toyota. “Our family has been avid readers of The Blue Sky Report® for many years and chose Kerrigan Advisors for their leading Toyota and Texas transaction experience, as well as their reputation for exceptional client service. True to form, Kerrigan Advisors surpassed our expectations. We feel very fortunate to have chosen Kerrigan Advisors to represent us on this once-in-a-generation sale process and would recommend them to any dealer family considering a sale.”

Texas is the largest, auto retail market in the Southern US, and ranks as the most economical state in the country in which to do business. Toyota is the #1 selling brand in both Houston and San Antonio, which are two of the four anchor metropolitan areas in Texas, and both are among the top ten fastest growing cities with two million+ populations. Given its high sales per rooftop, impressive growth and strong economy, Texas is the #2 most requested state by dealership buyers today according to Kerrigan Advisors.

“The Toomey family owned some of the most valuable dealerships in Houston and San Antonio and we were honored to be chosen to work with them to ensure their transaction was a success. It was critical that we fulfill each of their objectives for the sale and are proud to say that we were able to do so,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “We are confident that their long-standing reputation of service and positive imprint on their communities will continue in the hands of both these buyers. Thank you to the Toomey family for entrusting me and my team to shepherd the sale process from beginning to a successful outcome.”

Toyota franchises are highly sought-after due to their superior sales per franchise, strong fixed operations and robust profitability. In Kerrigan Advisors’ 2023 Dealer Survey, 93% of respondents expect the value of the Toyota franchise to increase or remain the same next year, the highest in the survey for the 5th consecutive year. Additionally, 98% of Kerrigan Dealer Survey respondents have a high or moderate level of trust in Toyota, making it the most trusted brand by dealers. Toyota also ranks the #1 brand requested by buyers in Kerrigan Advisors’ proprietary Buyer Database of 1,000+ buyers nationwide.

 “Toyota is the #1 brand in the industry and Texas is the #2 most requested state by buyers today, leading to valuation premiums and robust buyer demand,” said Ryan Kerrigan, Founder and Managing Director of Kerrigan Advisors. “As identified in Kerrigan Advisors’ 2023 Annual Blue Sky Report, while valuations are trending down for most franchises, import and luxury franchises in top growth markets are the exception. They continue to command strong valuations, in part because many are retaining pandemic-level earnings because of the growth dynamics in their markets. In light of all these factors, we were proud to help the Toomey family navigate the complexities of the strong buyer demand for their dealerships, and achieve a premium valuation.”

Susan White of White, Starling & Osterman was legal counsel to the Toomey family. George M. Taylor III of Burr & Furman was legal counsel to Shottenkirk Auto Group. Eric Prigden of Underwood & Roberts, PLLC was legal counsel to Vaughan Automotive.

About Kerrigan Advisors

Kerrigan Advisors is the leading sell-side advisor and thought partner to auto dealers nationwide. Since its founding in 2014, the firm has led the industry with the sale of over 270 dealerships representing more than $8 billion in client proceeds, including the third largest transaction in auto retail history – the sale of Jim Koons Automotive Companies to Asbury Automotive Group. The firm advises the industry’s leading dealership groups, enhancing value through the lifecycle of growing, operating and, when the time is right, selling their businesses. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, Kerrigan Advisors does not take listings, rather they develop a customized sales approach for each client to achieve their personal and financial goals. In addition to the firm’s sell-side advisory services, Kerrigan Advisors also provides a suite of consulting and investor services including growth strategy, market valuation assessments, capital allocation, transactional due diligence, open point proposals, operational improvement and real estate due diligence.

Kerrigan Advisors monitors conditions in the buy/sell market and publishes an in-depth analysis each quarter in The Blue Sky Report®, which includes Kerrigan Advisors’ signature blue sky charts, multiples, and analysis for each franchise in the luxury and non-luxury segments. To download a preview of the report, click here. The firm also releases monthly The Kerrigan Index™ composed of the seven publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail. To access The Kerrigan Index™, click here. To read the 2023 Kerrigan Dealer Survey, click here. To read the 2023 Kerrigan OEM Survey, click here. Kerrigan Advisors also is the co-author of NADA’s Guide to Buying and Selling a Dealership.

Kerrigan Advisors Media Contact:

Melanie Webber (melanie@mwebbcom.com), mWEBB Communications, 949-307-1723

Sale of Northwest Chrysler Dodge Ram Jeep in Houston underscores demand for dealerships in high-growth, densely populated markets; Kerrigan Advisors leads the industry in buy/sell transactions, particularly in Texas – 17 franchises sold in 12 months

HOUSTON, TX – June 17, 2024 – Kerrigan Advisors, the premier sell-side advisor and thought partner to auto dealers nationwide, represented Salt Lake City, UT-based Ken Garff Automotive Group, the third largest private dealership group in the US, in its sale of Northwest Chrysler Dodge Jeep Ram “CDJR” to Victoria, TX-based Keating Auto Group. This transaction represents Kerrigan Advisors’ 17th Texas franchise sold in the last 12 months, cementing the firm’s leadership position in the state’s buy/sell market.

Ken Garff Automotive Group, ranked ninth largest US dealership group by Automotive News based on 2023 new unit sales, was founded by Ken Garff after opening his first dealership 90 years ago in Utah. The group has since expanded to nine states with 73 dealerships and 28 brands. Keating Auto Group is the 17th largest US dealership group and one of the largest in the state, with an estimated 30 dealerships across Texas.

“Once we decided to selectively divest this CDJR dealership, we knew Kerrigan Advisors was the only team to represent us,” said Brett Hopkins, CEO of Ken Garff Automotive Group. “We strive to work with the best service providers in the industry and have always valued our relationship with Kerrigan Advisors. True to form, they ran a sales process that was professional and efficient, resulting in an excellent financial outcome for all parties.”

Northwest CDJR, owned by Ken Garff Automotive Group since 2007, is located in the high-volume Northwest Houston auto retail market with a uniquely large market area for the franchises. Houston is known for its strong truck and SUV market where, in 2023, 78% of new units sold were light trucks, resulting in high revenue per vehicle for SUV and truck-focused franchises. This makes it a very attractive market for CDJR, given its robust lineup of SUVs and trucks. Stellantis is also an industry leader in plug-in hybrid vehicle sales, an increasingly attractive alternative to electric vehicles. Notably, Jeep dominates the plug-in hybrid market in Houston, with the Wrangler and Grand Cherokee ranking #1 and #2 in Houston, respectively, in 2023. 

 “We were thrilled to have the opportunity to work with the Garff team again,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “This transaction was a classic example of the extraordinary buyer demand for domestic dealerships in high-growth markets. And, as evidenced by the level of interest we saw in this high-volume metro store, Texas is one of the hottest markets in the country. As they say, everything is bigger in Texas! We are proud to have found the right buyer for this dealership, one who understands the scope of this market and who will continue Northwest CDJR’s success.”

Houston is the 2nd largest MSA in the state, home to 7.3 million and anchored by 26 Fortune 500 companies and a flourishing economy. In addition to being highly regarded as an economically vibrant city, Houston is considered one of the best places in the US to live and do business in. Home to 9,000+ technology-related firms, NASA’s Johnson Space Center and more than 1,000 venture-backed startups, Houston was rated the #1 Best Place for Foreign Business in 2023 by the Financial Times and the #1 Destination for Millennials to Move from Austin by Harvard University.

“I want to thank the Garff family for entrusting Kerrigan Advisors to serve as their exclusive sell-side advisor on this transaction,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “With an estimated 250+ new residents moving to Houston every day, the area has consistently ranked in the top five for population growth. Transactions like this continue to demonstrate that there is strong buyer demand for the fastest growing markets in the US, like Houston. We are proud to have helped shepherd this transaction to such a successful outcome and congratulate Ben Keating and his team on a stellar addition to the Keating Auto Group.”

About Kerrigan Advisors

Kerrigan Advisors is the leading sell-side advisor and thought partner to auto dealers nationwide. Since its founding in 2014, the firm has led the industry with the sale of over 270 dealerships generating more than $8 billion in client proceeds, including the third largest transaction in auto retail history – the sale of Jim Koons Automotive Companies to Asbury Automotive Group. The firm advises the industry’s leading dealership groups, enhancing value through the lifecycle of growing, operating and, when the time is right, selling their businesses. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, Kerrigan Advisors does not take listings, rather they develop a customized sales approach for each client to achieve their personal and financial goals. In addition to the firm’s sell-side advisory services, Kerrigan Advisors also provides a suite of consulting and investor services including growth strategy, market valuation assessments, capital allocation, transactional due diligence, open point proposals, operational improvement and real estate due diligence.

Kerrigan Advisors monitors conditions in the buy/sell market and publishes an in-depth analysis each quarter in The Blue Sky Report®, which includes Kerrigan Advisors’ signature blue sky charts, multiples, and analysis for each franchise in the luxury and non-luxury segments. To download a preview of the report, click here. The firm also releases monthly The Kerrigan Index™ composed of the seven publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail. To access The Kerrigan Index™, click here. To read the 2023 Kerrigan Dealer Survey, click here. To read the 2023 Kerrigan OEM Survey, click here. Kerrigan Advisors also is the co-author of NADA’s Guide to Buying and Selling a Dealership.

Kerrigan Advisors Media Contact:

Melanie Webber (melanie@mwebbcom.com), mWEBB Communications, 949-307-1723

Sale of top volume Buick GMC and Chevrolet dealerships in Tennessee underscores the strong buyer demand in high-growth, business friendly markets in the Southern region; transaction marks Kerrigan Advisors’ 273rd dealership sale

MEMPHIS, TN – June 11, 2024 – Kerrigan Advisors, the premier sell-side advisor and thought partner to auto dealers nationwide, represented Memphis, Tennessee-based Sunrise Auto Group in the sale of Sunrise Wolfchase Buick GMC, the #1 Buick GMC dealership in Memphis, and Sunrise Buick GMC Collierville to Medford, Oregon-based Lithia Motors (NYSE:LAD). The completion of this transaction represents Kerrigan Advisors’ 273rd dealership transaction, including more than 80 in the Southern region since 2020, and more than 65 franchises sold year-to-date.

Owner Bob Berkheimer started Sunrise Auto Group 35 years ago in Memphis, the third largest metro area in the Southeast and home to a flourishing trade and transportation sector. Sunrise is the largest Buick GMC dealer in Memphis, capturing over 75% of Memphis’ Buick GMC sales. Wolfchase is the #4 Buick GMC dealership in Tennessee, and Buick GMC Collierville is the #4 Buick GMC dealership in Memphis and #7 in Tennessee. Sunrise is a decorated General Motors dealer, having earned several Mark of Excellence and Dealer of the Year awards. In addition, Buick GMC and Chevrolet are top performing domestic brands, ranking high in sales growth in 2023 and in the Kerrigan Advisors 2023 Dealer Survey for franchise valuation growth expectations in 2024.

“Kerrigan Advisors was extremely honored to represent Bob’s legacy in Memphis through the strategic sale of these high performing General Motors franchises to Lithia Motors, a new market for the company,” said Gabe Robleto, Senior Vice President, Sell-Side Advisory at Kerrigan Advisors. “It was a pleasure to work with him on this sale and identify the perfect buyer in Lithia for these powerhouse dealerships in the very attractive Tennessee market.”

“First and foremost, I want to thank our employees and the Memphis community for their steadfast support and loyalty over the past few decades,” said Bob Berkheimer, President of Sunrise Auto Group. “As I contemplated this sale, it was critical to find the right buyer to continue our legacy here. I am confident that the dealerships, including my employees, will continue to see great success under Lithia’s ownership.”

Bob continued: “We knew that the buy/sell process would be complicated, and we wanted to get it right, so we hired the firm that was recommended as the best in the business – Kerrigan Advisors. And they more than lived up to their reputation, guiding us with care, expertise and acumen every step of the way, completing the transaction.” 

Tennessee ranked #3 in America’s Top States for Business by CNBC, and Tennessee’s status as a business-friendly, right-to-work state, coupled with its absence of state income taxes, has driven substantial population growth. These attributes continue to drive strong buyer demand as described in Kerrigan’s 2023 Annual Blue Sky Report, which reports buyer demand for dealerships in the Southern states to be very high, particularly those markets with the highest population growth, strong franchise laws and business-friendly climates.

“The Southeast and, in this case, Tennessee, remains the go-to market for auto retailers, and we see most of the larger players in automotive retail seeking to expand their footprint in the South” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “Given current data trends, we expect this to be the case for the foreseeable future, and we were proud to support Bob on this very successful transaction.”

Stephen Dietrich and Brooke Sizer of Holland & Knight served as legal counsel to the seller.

About Kerrigan Advisors

Kerrigan Advisors is the leading sell-side advisor and thought partner to auto dealers nationwide. Since its founding in 2014, the firm has led the industry with the sale of over 270 dealerships representing more than $8 billion in client proceeds, including the third largest transaction in auto retail history – the sale of Jim Koons Automotive Companies to Asbury Automotive Group. The firm advises the industry’s leading dealership groups, enhancing value through the lifecycle of growing, operating and, when the time is right, selling their businesses. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, Kerrigan Advisors does not take listings, rather they develop a customized sales approach for each client to achieve their personal and financial goals. In addition to the firm’s sell-side advisory services, Kerrigan Advisors also provides a suite of consulting and investor services including growth strategy, market valuation assessments, capital allocation, transactional due diligence, open point proposals, operational improvement and real estate due diligence.

Kerrigan Advisors monitors conditions in the buy/sell market and publishes an in-depth analysis each quarter in The Blue Sky Report®, which includes Kerrigan Advisors’ signature blue sky charts, multiples, and analysis for each franchise in the luxury and non-luxury segments. To download a preview of the report, click here. The firm also releases monthly The Kerrigan Index™ composed of the seven publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail. To access The Kerrigan Index™, click here. To read the 2023 Kerrigan Dealer Survey, click here. To read the 2023 Kerrigan OEM Survey, click here. Kerrigan Advisors also is the co-author of NADA’s Guide to Buying and Selling a Dealership.

Kerrigan Advisors Media Contact:

Melanie Webber (melanie@mwebbcom.com), mWEBB Communications, 949-307-1723