Haig Partners

As 2025 draws nearer, we get more excited. The next year for auto retail is expected to be a good one, with economists and analysts projecting a return to a 16M+ SAAR. Recently Cox Automotive Inc. shared its December SAAR projections; an estimated 16.5M SAAR for the month of December. This would be the highest monthly SAAR since May 2021, but a new forecast by J.D. Power came in even higher with a December SAAR forecast at 17.2M. Improvements in affordability and lower interest rates will help drive higher new vehicle sales in 2025. For dealership owners, this marks an exciting opportunity to capitalize on favorable market conditions.

From all of us at Haig Partners, we wish you a joyous, healthy and happy holiday season!

Transaction Announcement: Foundation Automotive Corp sells Subaru and Chevrolet dealerships in Mandan, North Dakota. We are proud to share that Haig Partners served as the exclusive sell-side advisor on the sale of Chevrolet of Mandan and Subaru of Mandan to Eide Automotive Group, led by Jesse Peterson. Foundation Automotive operates over 20 dealerships in Colorado, Texas and Tennessee. The company is not divesting its entire portfolio, but rather strategically reallocating capital and resources to focus on its core markets, similar to what other large dealership groups do from time to time. This sale represented an attractive opportunity for Foundation Automotive to take advantage of market conditions by divesting high-performing dealerships in non-core markets. Haig Partners has sold 57 dealerships so far in 2024, and more than 80 in the Midwest market. Learn more about the sale: https://hubs.la/Q030xZWM0

The sale of Bill Kidd's Toyota and Volvo stores are featured in Automotive News. Haig Partners was honored to represent the owners of Bill Kidd's Toyota and Volvo in their sale to Sheehy Auto Stores. The dealerships first opened in 1973, and the Toyota stores have earned Toyota Motor Corporation's highest recognition with the President's Award 15 times. https://hubs.la/Q030x1Mw0

Thank you, Car Dealership Guy, for the share! We are looking forward to the feedback and engagement.

New Vehicle Sales Reach Post-Pandemic Highs: What This Means for Dealership Owners and Valuations New data from Cox Automotive Inc. reveals that new vehicle sales have reached their highest monthly rate since the pandemic, with November's Seasonally Adjusted Annual Rate (SAAR) hitting 16.5 million. This marks the highest SAAR since May 2021, which had a monthly SAAR of 17.0 million. This resurgence signals that the improvements in new vehicle affordability, as highlighted in our Q3 2024 Haig Report®, are finally translating into higher sales volumes—a development that has significant implications for dealership values. https://hubs.la/Q030fWNC0

A Story of Family, Vision, and Growth: The Journey of Brothers and the Sale of Two Toyota Dealerships in West Virginia Shawn and David Ball are living proof that the American Dream thrives in the auto retail industry. The journey of these two brothers began with humble origins. Shawn started his career washing and transporting vehicles for a used car wholesaler before venturing into the used vehicle wholesale business. After years of hard work and frugality, Shawn acquired L&S Toyota, transforming it into a highly profitable operation. This success laid the groundwork for acquiring Advantage Toyota, which he co-owned with his older brother David. David Ball, who transitioned from a decade in the coal mines to the auto retail business, played a pivotal role in making Advantage Toyota the highest-volume dealership in the region. Later, Shawn took on the challenge of revitalizing Toyota of Charleston, now Victory Toyota of Charleston. Today, David enjoys a well-deserved retirement, while Shawn continues to lead L&S Toyota, a dealership he envisions passing down to the next generation. Read more about Shawn and David and their journey: https://hubs.la/Q0300Pb00

In case you missed in last week's Automotive News: Sales Per Dealership Have Changed Significantly: Here is a 5-year lookback on unit change in average new car sales per dealership. Dealership Profits Continue to Fall: The decline in earnings has slowed in Q3 from the first two quarters of 2024 (see charts attached). We hope the profit decline levels out over the next two quarters or so, and perhaps we can regain profit growth. Dealership Valuations are Evolving: Some franchises enjoy profits near record highs, so their values remain near record high levels. Other brands have fallen much further in financial performance over the past year. Estimated Average Blue Sky Value Per Dealership: The Q3 average blue sky value is a 12% reduction from the end of 2023, which we now perceive as the market's peak. Average earnings remain well elevated from pre-pandemic times, and the demand from private buyers remains strong. Read more: https://lnkd.in/gbYs9CJr

In addition to current auto retail trends, Alan Haig discussed how dealerships are being valued. At Bank of America's Auto Dealer Day, he shared in part, "We see a lot of cash out there, and dealers want to put it to work in a store near their current business and/or one that their children might want to operate. So, we are seeing the demand for these dealerships to be as high as they have ever been, even though the values are slightly slower because earnings have come down. So, we do not even know. It is not looking at the profits in 2020, 2021, 2022 or even 2023. It is what they are making now. And then if you look at 2019 – that is the disaster case. That is how we think many buyers are doing the math in their heads today. It is not a sophisticated IRR analysis, as some of us are used to learning from our business classes. Rather, in many cases, it is a gut feeling these dealers have when valuing stores." Thank you, John Murphy, and the team at Bank of America, for another great event. https://hubs.la/Q02_hnn_0

Since the peak year for dealership profits, 2022, average pre-tax income at publicly owned dealerships has fallen by 35.5%. These numbers may sound terrible, but Q3 average profits per store were still 100% higher than in Q3 2019 before the pandemic began to take effect.