After enduring Chrysler's bankruptcy, the uncertainty of its acquisition by Fiat and the Great Recession, Chrysler Group dealers are finally receiving healthy offers to buy their stores.
"We did not want to sell. We had no plans to sell. It was the right buyer and they wanted where we were," said Doug Moreland, a longtime Chrysler dealer.
Moreland and his partner sold four Chrysler and two Fiat stores in Phoenix and Tucson, Ariz., this spring to the privately held Larry H. Miller Group of Cos.
Terms of the deal were undisclosed, but Moreland said: "They paid a very, very good price" -- a price that included blue sky multiples.
Blue sky is the intangible value of a dealership, including goodwill and other intangibles such as customer lists and marketing materials. It is expressed as a multiple of adjusted pretax income.
Such sales are becoming more common. In December, AutoNation, the country's largest automotive retailer ranked by 2012 new-vehicle retail sales units, paid $8.8 million for goodwill as part of its purchase of a large Chrysler store near Houston. The store, formerly called Spring Chrysler-Jeep-Dodge-Ram, is among the 10 largest Chrysler dealerships in the nation. AutoNation did not disclose the blue sky multiple or annual unit sales of the store.
Four years ago, Chrysler Group dealerships garnered little or no blue sky, dealership brokers say.
"I remember in 2008 and 2009 it was tough to give away a Chrysler store," said Tim Lamb, president of Tim Lamb Group, a dealership broker in Granville, Ohio. "The turnaround has been really significant. There's a big demand for Chrysler stores, and the values have gone up significantly."
Presidio Group, a San Francisco financial services company that brokers dealership sales, said Chrysler Group stores are garnering blue sky values of 3 to 4, on a par with Ford Motor Co., Nissan brand and General Motors dealerships. Mercedes-Benz dealerships' blue sky values were among the highest in Presidio's most recent report, attaining multiples of 5.5 to 7.5. By comparison, Toyota-Scion and the Honda brand's multiples were 5 to 6.
"If I'm a dealer that's interested in growth, I don't think I would sell a Chrysler dealership today," said Alan Haig, Presidio's head of automotive services. "But if I were 70 and thinking about exiting, I would think now is a great time to consider selling because I'm going to get the best price that I could have gotten for the last 20 years."