It’s a seller’s market for automotive retail buy-sell deals.
Wait, no, it’s a buyer’s market.
OK, it actually depends on who you talk to.
“It’s all over the board,” Dean Fitzpatrick, president of Larry H. Miller Dealerships, said in an interview with Automotive News when asked about where he sees pricing on dealerships for sale.
“As you continue to search, some of them are overpriced, and some of them make sense,” Fitzpatrick said.
His group has searched for an acquisition over the past six months across the seven Western states where it owns 54 dealerships. In short, it’s a “competitive” market, Fitzpatrick said.
Still, he expects to announce a deal by year end or in the first quarter -- provided the pricing “pencils.” And, that is a challenge, he said.
“It’s still got to make sense for us financially,” Fitzpatrick said. “There needs to be a return on investment.”
Sonic Automotive’s leaders evaluate potential purchases daily, but it’s largely still a seller’s market, CEO Scott Smith told Automotive News.
“We’ve been slow to act because pricing is a little frothy. Eventually, it’ll come down as sales come down,” Smith said.
Smith blamed years of profit stability for creating a market in which sellers’ high earnings expectations mean that “pricing on some of these deals have gotten to the point where it doesn’t make any sense for us.”
But Lithia Motors Inc. CEO Bryan DeBoer stops short of characterizing it as a seller’s or a buyer’s market. For him, it comes down to finding deals that fall into a performance sweet spot.
“We buy deals that are average performing,” DeBoer said. “When those deals come to the market, we pay all the money. We’ll pay 10 to 15 times earnings because if a store’s not doing what it can do, we look at what we can do with the store.”
In that rare case, it becomes a buyer’s and a seller’s market.