The blue-sky multiples of Audi stores have risen to roughly match those of Lexus and Porsche stores, a new report says.
Domestic brands' values rose across the board in the first half, but values of Hyundai and Volkswagen-brand stores fell slightly, Presidio Group's Automotive Retail Buy-Sell Report says.
BMW/Mini and Mercedes-Benz stores still lead the pack, commanding blue-sky multiples of 5.5 to 7.5, the report says. Blue sky is the intangible value of a dealership, including goodwill and items such as customer lists and marketing materials. It is expressed as a multiple of adjusted pretax income. So that means buyers of those dealerships typically can expect to pay 5.5 to 7.5 times the store's current pretax profit, adjusted for various extraordinary items.
But Audi's multiples have joined the next tier, at 6.0 to 7.0.
Presidio cautions, though, that actual multiples can vary significantly from its estimates because of the unique characteristics of each buy-sell deal.
In a market such as Denver, for example, blue-sky values of stores selling all-wheel-drive Subarus might be more like those of Toyota or Honda stores, says Alan Haig, head of automotive services for Presidio Group. Nationwide, though, Subaru's 3.5 to 4.5 multiple is well below the 5.0 to 6.0 commanded by both Toyota and Honda.
In general, the changes in the estimates reflect the changing fortunes and outlooks of various brands.
Take VW. Its blue-sky multiple rose in the previous two editions of the semiannual report. And it has been one of the most active franchises in the buy-sell market: Large dealership groups have bought seven VW dealerships in the past 18 months, Presidio says.
But VW-brand sales fell 1 percent in the first half, after surging 35 percent in 2012. Haig says when he talks to recent VW store buyers, "They think VW has hit a wall." VW brand's blue-sky multiple fell to 4.0 to 4.5, from 4.0 to 5.0 at the end of 2012.
Multiples rose for the second report in a row for Ford brand, to 3.5 to 4.5, and Chrysler-Jeep-Dodge-Ram, to 3.25 to 4.25.
Reflecting a slight uptick in interest in General Motors' brands, the report broke out those brands separately for the first time, with each showing a gain at the top end of the range of blue-sky multiples. All GM brands had been lumped together at 3.0-3.5 in the previous report, but this time Cadillac and Chevrolet were rated at 3.0 to 4.0, while Buick-GMC was rated at 3.0 to 3.75. c