AutoNation Inc. is finding that owners of dealerships are driving hard bargains, which can make closing acquisitions challenging, a top executive said on Friday.
"There are certainly an awful lot of people who are at a point in their lives where they want to exit the industry," AutoNation COO Mike Maroone told Reuters on the sidelines of a J.D. Power & Associates conference.
"For us, it's about finding that right valuation and it's a difficult thing," Maroone said.
AutoNation is looking to expand the 242 franchises it holds in 15 states after recently purchasing stores in Florida and Georgia. Maroone said AutoNation wants to focus on markets where the company already has a presence.The company spent $73.1 million on acquisitions last year, after spending just $200,000 in 2009, when the U.S. auto industry saw its worst sales figures in 27 years.
Now, AutoNation's deal activity is picking up, but buyers and sellers sometimes stand apart on how to value dealerships as the industry shifts to growth mode, Maroone said.
"Some people want to be valued based on earnings four or five years ago and obviously buyers don't want to value that way," Maroone said. He added that plummeting real estate values also make it difficult to pin down a property's worth.