Haig Partners analysts say second-quarter sales of used vehicles such as the discontinued but in-demand Toyota FJ Cruiser grew by more than 4% year-over-year for privately owned dealerships. 
 -  Photo courtesy Toyota Motor Sales USA

Haig Partners analysts say second-quarter sales of used vehicles such as the discontinued but in-demand Toyota FJ Cruiser grew by more than 4% year-over-year for privately owned dealerships.

Photo courtesy Toyota Motor Sales USA

FT. LAUDERDALE, Fla. — The latest edition of The Haig Report, produced on a quarterly basis by buy/sell firm Haig Partners, finds the number of high-value dealerships bought and sold in the U.S. decreased by 60% in the second quarter of 2019, compared to an “exceptionally busy” Q2 2018.

The report found the number of dealerships that traded hands fell from 122 to 49 year-over-year. Acquisition spending in the first two quarters of 2019 by publicly traded auto retailers is less than half of that spent in the same period of 2018.

Read: Pace of Dealership Acquisitions Slows in Q2

Analysts noted that private dealers are increasing their focus on used vehicles, with volume up 4.1% compared to last year and several clients achieving greater than 2:1 used to new ratio.

The pause in public company investments may be attributed to waiting to see the outcome of trade wars, tariffs and Federal Reserve actions unfolding. Thanks to a lift in dealership profits so far this year, the estimated average blue-sky value per dealership held steady from 2018.

“Given the large number of dealerships available for purchase, we think the rest of 2019 and 2020 will present excellent opportunities for groups looking to add scale.”

There are a large number of dealerships on the market for sale today due to aging owners, increasing complexity of operations, and a perception that smaller dealers will have greater difficulties competing with larger groups in the future, analysts noted.

“Auto dealers have managed to defy gravity and increase their profits compared to last year. The buy-sell market has suffered this year due to uncertainties in buyers’ minds about tariffs and the overall direction of the economy. But the ongoing strength of the auto retail industry is bringing buyers back to the table, and we believe that transaction activity will rebound to more normal levels in the second half of the year,” said Alan Haig, the firm’s president.

“Given the large number of dealerships available for purchase, we think the rest of 2019 and 2020 will present excellent opportunities for groups looking to add scale,” he added.

Read: 5 Reasons to Partner With a Dealer Facilities Rep

Originally posted on Auto Dealer Today

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