Dealership Profits Dip Slightly Along with Blue Sky Values, but the Seller's Market Continues
Dealership profits have peaked due to rising interest rates, inflation, and low consumer confidence, but they are still 2.4x higher than before the Pandemic.

Dealership profits have peaked due to rising interest rates, inflation, and low consumer confidence, but they are still 2.4x higher than before the Pandemic.
IMAGE: Haig Partners
FORT LAUDERDALE, Fla. – Haig Partners LLC released its Q3 2022 Haig Report, which tracks trends in auto retail and their impact on dealership values. Dealership profits have peaked due to rising interest rates, inflation, and low consumer confidence, but they are still 2.4x higher than before the Pandemic.
Buy-sell activity in the first nine months of 2022 is at record-high levels, with a total of 369 dealerships being acquired, up 5% compared to the same period in 2021. Private buyers have acquired 337 stores, 24% more than in the same period last year.Buyers believe the long-term outlook for auto retail remains bright despite risks on the horizon from electric vehicles, the agency model, direct-to-consumer sales, changing consumer habits and other factors that could erode the franchise model over time. Some dealers are taking advantage of these robust conditions to exit and are finding ready buyers so long as their expectations are realistic.Highlights from the Q3 2022 Haig Report include:
Due to pent-up demand and limited supply, dealer profits could remain high for some time
Public buyers have reduced spending on dealership acquisitions
Private buyers have become more active, spending record amounts
Average estimated blue sky value has declined slightly but is still more than double pre-Pandemic levels
Alan Haig, President of Haig Partners, said, “The auto retail industry has entered a new phase. Higher rates will reduce purchasing power for consumers and drive up expenses for dealers. The good news is that there is still a significant amount of pent-up demand for new vehicles. We think it will take years for the factories to make up for all the lost sales and during that time dealers should continue to enjoy strong profits. Our belief is shared by many dealership buyers, as proven by the high demand for dealerships today. Buy-sell activity is ahead of last year through the third quarter, and our practice at Haig Partners expects to close on the sale of around 50 dealerships this year, all at very strong valuations. Times are still very good for sellers.”
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