Those in the buy-sell arena expect heavy activity over the next few years because most of the largest dealership groups, public and private, have amassed hoards of cash.
The dealership groups have largely completed facility upgrades and thus have less need to fund those projects than in the past. And for the public groups, high stock prices reduce the appeal of stock buybacks. That leaves spending the cash on acquisitions as a top choice, experts say.
Many dealership group leaders concur.
"We've got the capital, there's no question about that," Asbury Automotive Group Inc. CEO Craig Monaghan said. "We're certainly in a position where we can write a $100 million check or more and would be more than willing to do so if we can find the right opportunities."
In 2006, the top 20 private dealership groups had an estimated $719 million for various uses after taxes, says Alan Haig, president of dealership buy-sell advisory firm Haig Partners in Fort Lauderdale, Fla. By 2013, that had climbed to about $1.025 billion, he says -- a 43 percent increase.
"And with the private groups, they don't have to go back and buy back their stocks. They already own it," Haig says. "That's one less use of cash they have than publics."
In 2013, the public dealership groups had an estimated $1.35 billion of after-tax cash generated from their operations, up 115 percent from 2008, Haig says.