Trade News

Valuing dealerships is complicated as buyers weigh many factors when determining how much they will pay in a transaction. The buy-sell market has changed dramatically from 2019 as profits surged, and valuations are changing again as conditions begin to get tougher. Past valuation methodologies may no longer accurate in determining blue sky value, so sellers must run a competitive auction process in order to uncover the Most Motivated Buyer® for their store(s).

Q: Do you think the elevated earnings dealers are enjoying will continue much longer?

Alan Haig: There’s a lot of confusing noise in the economy right now with inflation, rising interest rates and a falling stock market, but also increased employment and greater household wealth. Dealership profits more than tripled since the Pandemic hit. Profits likely peaked in the first half of this year, but we believe dealers will be enjoying elevated profits for some time. By our estimate, there will be pent-up d…

Stellantis is breathing a little more life into Fiat, the Italian brand that's been reduced to a solitary nameplate in North America.

It's bringing the electric 500e back to the U.S. to take advantage of the industry's ongoing electric "revolution," brand CEO Olivier Francois said. But after years of learning hard lessons about American consumer tastes, it doesn't have grand volume ambitions for the car, he said, and there are no plans to expand the portfolio further.

Fiat, Francois told Automotive News, isn't going to try to be everything to everybody.

"The lesson learned is humility," he said of Fiat's experience in the U.S. over the past decade. "America doesn't need another brand, doesn't need Fiat, doesn't need an average mainstream car brand doing mainstream cars. We are not bringing anything really new to the party, but where America needs us is to make this polarizing, niche, unique statement, and that's where the 500 and, to…

Tesla Inc. is recalling more than 321,000 U.S. vehicles because tail lights may intermittently fail to illuminate, the company said in a filing made public Saturday.

The news follows the company's recall on Friday of nearly 30,000 Model X cars in the U.S. over an issue that may cause the front passenger air bag to deploy incorrectly, which sent its shares down almost 3% to a near two-year low.

In the filing published Saturday to the National Highway Traffic Safety Administration, the EV manufacturer said the tail light-related recall covers some 2023 Model 3 and 2020-2023 Model Y vehicles.

Texas-based Tesla said it will deploy an over-the-air update to correct the rear light issue and said it has no reports of any crashes or injuries related to the recall.

The company said the recall followed customer complaints that emerged in late October, largely from foreign markets, claiming vehicle tail lights were not illuminating.

The investigation …

Just as “Black Panther” marketing reaches a crescendo, the brand hype has started for the year’s next mega-blockbuster, “Avatar.” Mercedes-Benz debuted a co-promotional campaign with the sci-fi sequel, called “Avatar: The Way of Water,” which hits theaters Dec. 16.

The effort, created in partnership with Avatar’s movie studio 20th Century Studios, will run globally and plug Mercedes’ elective vehicle lineup, including the Mercedes-EQ and EQE crossover. Ads will run on TV, in cinemas as well as digital and social media.

An ad released Friday shows a woman being transported from a parking lot into Avatar’s fantastical world, filled with tropical forests, flying creatures and exotic sea life. The tagline, “Earth is Our Pandora,” is aimed at linking Mercedes with environmental causes while also serving as a film reference — Pandora is the name of the fictional planet invaded by the U.S. Armed Forces in search of minerals in the original movie, set in the year 2154…

Matt McGovern went on a dealership acquisition spree to start 2022.

With the exception of April, McGovern bought one franchised dealership each month from January through June, bolstering McGovern Automotive Group's presence in Massachusetts with five more stores.

McGovern's acquisition activity is a microcosm of the buy-sell market for the first half of the year: Private groups — not the publicly traded auto retailers — collectively were the most active buyers, often completing deals for just one or two dealerships at a time.

Automotive News, which last year for the first time rigorously documented dealership acquisitions, tracked 178 buy-sell transactions in the first half of 2022, involving 253 U.S. franchised dealerships trading hands. The transaction count rose 19 percent from 150 in the first half of 2021, while the number of acquired dealerships slipped slightly from 261 in the year-earlier period.

Lithia Motor…

Dealership acquisition and spending by the public dealership groups, which collectively played a significant role in last year's feverish buy-sell market, dropped sharply in the first half of 2022.

Lithia Motors Inc., Group 1 Automotive Inc., Penske Automotive Group Inc. and Sonic Automotive Inc. bought 21 U.S. franchised dealerships in 10 transactions in the first six months of 2022, down from 67 stores acquired by public auto retailers in 17 deals in the first half of 2021, according to Automotive News' tracking of dealership buy-sell activity.

The number of dealerships purchased by the public groups in this year's first half decreased by more than two-thirds compared with the first half of 2021, a period headlined by Lithia's April 2021 purchase of Michigan's Suburban Collection and its 34 franchised dealerships.

LMP Automotive Holdings Inc., which is now traded over the counter and is pursuing a liquidation plan, is included in the 2021 buying figu…

The dealership acquisition story is still unfolding

Last year, Automotive News for the first time rigorously documented new-vehicle dealership transactions, or what is commonly referred to in the industry as buy-sells.

As fate would have it, 2021 arguably was the biggest year for dealership acquisitions in history. But last year's data tracking wasn't a one-time thing.

Throughout 2022, Automotive News has continued to collect data submitted by dealers, buy-sell brokers and others and we have hunted down details on other transactions found in company regulatory filings, local news reports and social media posts.

All of which leads us to Monday's paper.

On Page 1 you'll find another data-rich story focusing on buy-sell activity for the first half of 2022.

The big takeaway?

Private groups — not the publicly traded auto retailers — collectively were the most active buyers. And they often bought just one or two dealerships at a t…

Albert Johnson petitioned for more than a decade before he became the first Black dealer for General Motors.

Johnson entered the car business by balancing a job in hospital administration with being the "salesman who sold from a briefcase" at Noting Oldsmobile in Kirkwood, Mo.

He was not permitted to sell from the dealership premises in 1954, according to African-American New Car Dealers, a historical database created by former Ford Motor Co. executive Rusty Restuccia.

"I sold more cars in a year than three of our salesmen put together," Johnson told The History Makers, a collection of oral histories capturing the Black experience.

Johnson spent 15 years asking to lead a GM dealership, according to the Chicago Sun-Times. In 2008 Johnson told Automotive News that he appealed to Martin Luther King Jr., who took Johnson's case to President John F. Kennedy for help petitioning the Detroit automakers.

He succeeded in 1967, taking over a strugg…

When Nathan Conyers acquired a Ford dealership in 1970, he was a unicorn of sorts — a Black auto dealer in a profession that was virtually all white.

At the time, Conyers was a partner in a successful Detroit law firm, a position that offered financial comfort and political connections. But Conyers' father, a former factory worker and union organizer, preached the benefits of business ownership.

His son got the message. In 1970, Conyers and his brother — U.S. Rep. John Conyers of Michigan — acquired a Ford dealership in Detroit, the first Black-owned Ford outlet east of Chicago.

Conyers urged the Detroit 3 to provide training and financial support for fledgling Black dealers. With the help of Rev. Jesse Jackson, he formed the National Black Dealers Association later that year to press his case.

"The normal profile of a dealer is a person whose father, uncle, brother or some relative has been in the business," Conyers told the Detroit Free Press …

When Irma Elder's husband, James, died in 1983, he left her with three children and a Ford dealership — and the courage to become the first woman to own a Ford dealership in the Detroit area.

"Every penny that we had was put into keeping the dealership alive," Irma Elder told Automotive News in June 2008. "It was absolutely necessary that I take over. My father said, 'You have to do it.' My mother said, 'I'll pray for you. It will be all right, because God takes care of widows.' "

Under her leadership and as a testament to her business acumen, that one Ford dealership grew into Elder Automotive Group, which became one of the largest woman- and minority-owned auto retailers in the country. Elder was 84 when she died in 2014.

By 2008, just before the start of the Great Recession, Elder Automotive operated 11 dealerships in Michigan and Florida, representing Aston Martin, Ford, Land Rover, Lincoln, Jaguar, Mercury, Saab and Jeep brands. And in the late 19…

Jenell Ross, president of Bob Ross Auto Group in Centerville, Ohio, is a trailblazer and influential dealer in her own right.

The second-generation retailer became the first Black dealer to chair the American International Automobile Dealers Association in 2013 and she chaired the board of directors of the Federal Reserve Bank of Cleveland, Cincinnati branch. She also sits on other boards of companies such as Cars.com, even as she advocates for the development of more women and minorities as both dealers and employees in retail automotive.

But it was her parents, Bob and Norma Ross, who first trod the career path that Jenell has traveled.

Bob started in the retail auto industry in 1962 selling cars at Shannon Buick in Dayton, Ohio, and was in the first class of dealer hopefuls enrolled in General Motors' Minority Dealer Academy, in 1972, according to Ross.

Norma was an elementary school teacher and a curriculum consultant in the Dayton Public Sc…

VISIONARY DEALERS

The history of the U.S. auto industry is full of tales of car dealers who blazed new trails and influenced those who came behind them. Automotive News shared the stories of 50 of them back in 2009 in our first Visionary Dealers section. We’ve revisited that theme of pioneering retailers to select another 25 who fought for dealer rights, made marketing innovations, took chances on emerging brands, broke new ground in online sales or agitated for greater diversity among their ranks. They aren’t the only visionary dealers in the industry’s present or past, but their achievements provide lessons and inspiration for their peers.