6 factors that are effecting today's buy/sell market
None of us know for sure the trajectory of our industry and our country in this most unpredictable of times. Between political upheaval, catastrophic events, vehicle inventory shortages and economic instability, the current profitability of the auto industry may not be sustainable.
Dealership Values are higher than ever. Prices for dealerships have never been higher and that is not going to be sustainable. Prices being paid for dealerships increased rapidly over the period of several months. While they are still quite high, when they begin to fall the change will be rapid.
Strong Qualified Buyers. Financially strong buyers are looking for good dealerships to acquire, however the list of those capable of purchasing at today’s high prices is short. For any given dealership, there are only a few ideal candidates. You need to be available when the right buyer wants you.
Consolidation is eating up independent and small cluster dealerships at a rapid rate. There comes a time when enough of the dealerships surrounding you may have been added to other groups, making your own inconsequential and far less valuable.
Taxes will surely increase. The earlier you sell the better your chances are of beating out the tax man.
Electric Vehicles and the Online Threat. OEMs believe the consumer prefers online sales and may be inclined to make online sales and direct distribution part of every Dealer’s new EV Participation Plan. Every Dealer will need to comply with EV requirements which will be quite costly, particularly for Dealers in smaller more rural areas where the benefits from the investment may be difficult to recoup.
Questionable Future. Rolling the dice on politics is a dangerous game. No one expects a reversion to incentivizing businesses through lower taxes and less regulation in the current administration. In fact the move towards socialism has been faster than any one, republican or democrat, could imagine. The move away, when it comes, will be slow, arduous and painful - and may not come in your lifetime.