VW sinks, Detroit 3 rise in buy-sell reports
Skip to main content
Sister Publication Links
  • Automotive News Canada
  • Automotive News Europe
  • Automotive News China
  • Automobilwoche
AN-LOGO-BLUE
Subscribe
  • Subscribe
  • Account
  • login
  • HOME
  • NEWS
    • Dealers
    • Automakers & Suppliers
    • News by Brand
    • Cars & Concepts
    • Final Assembly
    • China
    • Shift
    • Mobility Report
    • Special Reports
    • Digital Edition Archive
    • This Week's Issue
    • You may have won! But no
      The course was planned for a Vermont ski resort, until neighbors shouted the idea down.
      Off-road course for Broncos? Not in my backyard
      The 1965 Mustang Shelby GT350 reigned supreme in the Ford Frenzy tournament.
      Shelby GT350 gets its one shining moment
      Dan Parker will pilot his Chevrolet Corvette with a custom guidance system that provides audible feedback.
      Blind racer gets Cruise support, but he'll drive
    • CL 21.009.014 (1).jpg
      Stellantis to build flagship Citroen in China to buttress Asia sales
      Tesla China
      Tesla says data collected in China is stored there
      Huawei
      Huawei to invest $1 billion on auto technology
      GAC Motor Co. launched sales of a new full electric crossover, the Aion Y, in March.
      New-vehicle sales rebound 75% in March from virus-hit 2020
    • Udelv CEO offers a historical perspective on high-tech goods delivery
      Q&A with BrightDrop CEO Travis Katz
      Automakers optimize manufacturing, customize products through digitization
      3D-printing a Porsche: Making concepts matter
    • Ford Michigan Central Depot
      Public, private sector engagement key to smart cities, experts say
      Blue Cruise
      Ford's BlueCruise hands-free system to cost $600 for 3 years
      Lotus Evija web_0.jpg
      Geely's Lotus said to weigh raising $1B for EV shift
      WeRide China.jpg
      Nissan-backed startup gets OK to test driverless vehicles in U.S.
    • Elon Musk interview
      Tesla’s Model Y, on sale since March, is a showcase of EV technologies competitors will benchmark.
      Technologies of Electrification
      Cadillac’s Lyriq EV will be unveiled Aug. 6.
      Future Product Pipeline
      A CALL TO ACTION
    • Ad process evolves with pandemic
      Pandemic adds resonance to Garff effort
      Microchip illustration
      The latest numbers on the microchip shortage: GM production pummeled
      Moreno sets sights on Washington
    • Access F&I
    • Fixed Ops Journal
    • Marketing
    • Used Cars
    • Retail Technology
    • Sales
    • Best Practices
    • Dealership Buy/Sell
    • NADA
    • NADA Show
    • Automakers
    • Manufacturing
    • Suppliers
    • Regulations & Safety
    • Executives
    • Talk From The Top
    • Leading Women Network
    • Guide to Economic Development
    • PACE Awards
    • Management Briefing Seminars
    • World Congress
    • Aston Martin
    • BMW
      • Mini
      • Rolls-Royce
    • Daimler
      • Mercedes Benz
      • Smart
    • Ford
      • Lincoln
    • General Motors
      • Buick
      • Cadillac
      • Chevrolet
      • GMC
    • Honda
      • Acura
    • Hyundai
      • Genesis
      • Kia
    • Mazda
    • McLaren
    • Mitsubishi
    • Nissan
      • Infiniti
    • Stellantis
      • Alfa Romeo
      • Citroen
      • Chrysler
      • Dodge
      • Ferrari
      • Fiat
      • Jeep
      • Lancia
      • Maserati
      • Opel
      • Peugeot
      • Ram
      • Vauxhall
    • Renault
    • Subaru
    • Suzuki
    • Tata
      • Jaguar
      • Land Rover
    • Tesla
    • Toyota
      • Lexus
    • Volkswagen
      • Audi
      • Bentley
      • Bugatti
      • Lamborghini
      • Porsche
      • Seat
      • Skoda
    • Volvo
    • (Discontinued Brands)
    • Virtual reveals (Sponsored)
      • MITSUBISHI: 2022 Outlander
      • NISSAN: 2022 Pathfinder and 2022 Frontier
      • GENESIS: 2021 GV80
      • KIA: 2021 K5
      • LEXUS: 2021 IS
      • NISSAN: 2021 Rogue
      • TOYOTA: 2021 Venza and 2021 Sienna
    • Auto Shows
    • Future Product Pipeline
    • Photo Galleries
    • Car Cutaways
    • Design
  • OPINION
    • Blogs
    • Cartoons
    • Keith Crain
    • Automotive Views with Jason Stein
    • Columnists
    • China Commentary
    • Editorials
    • Letters to the Editor
    • Send us a Letter
    • Mach-E
      For Ford, 3rd-party charging network must improve to reap Mustang Mach-E potential
      VW logo with reflection
      VW lied to sell diesels; now it lied to sell EVs
      265725_XC90_Inscription_in_Birch_Light.jpg
      Volvo targets top talent in U.S., China with generous parental leave policy
      The new Stellantis pickup: Schrödinger's Dakota
    • In case of supply chain woes, break glass
      Quick! The Biden phone
      VW's Joke Is On You
      Joke Is On You
      In case of supply chain woes, break glass
      view gallery
      3 photos
      Leo Michael Cartoons - Q2 2021
      Leo Michael: There's Nothing You Can Do!
      Nothing You Can Do
    • Shifting gears away from the stick shift
      SEMA still a wonderful circus
      Penske still has plenty of races to win
      Ford's turn in the hot seat
    • April 13, 2021 | GM shows it’s serious about electric
      April 6, 2021 | For Volkswagen, authenticity is the only path forward
      March 30, 2021 | Tesla “changes” car industry
      March 23, 2021 | Remote work will continue after the pandemic
    • Tracy Fred
      Dealers deserve access to their data
      Ford's Blue Advantage tool shows it's ‘listening' to dealers
      Jamie Butters
      EV rebates must work at retail
      Dan Shine
      Service drive can lift dealerships as source of used-vehicle inventory
    • Why Xiaomi holds promise of becoming formidable EV player
      Geely’s new EV push is decidedly new age
      Charging poles installed outside a Tesla store in downtown Shanghai.
      Unreliable public EV charging sites prompt automakers to take wheel
      VW Group's playbook to dominate EV market
    • A step in right direction for Nissan dealers
      ‘Voltswagen' April Fools' gag far from funny
      Less is more in lineups as well as on lots
      Electric vehicle charger
      Electric vehicle hype opens door to short sellers
    • ‘Voltswagen' was clever and fun
      With EVs, bias for traditional carmakers
      EV adoption in U.S. shouldn't be forced
      There goes VW recycling again
  • DATA CENTER
  • VIDEO
    • AutoNews Now
    • First Shift
    • Special Video Reports
    • Weekend Drive
    • AutoNews Now: Audi targets EV mass market with Q4 e-tron
      AutoNews Now: Another threat to supply chain: Rubber shortage
      AutoNews Now: Biden eyes $50B for chip production, research
      AutoNews Now: EV battery decision looms for SK Innovation, LG Chem
    • First Shift: Ford to launch 'BlueCruise' hands-free driver-assist system in Q3
      First Shift: Lithia tops AutoNation in U.S. store count with Suburban deal
      First Shift: Ford dealers plan standalone Bronco stores
      First Shift: Hyundai to idle more output due to chip shortage
    • How a Seattle-area dealer is teaching, retaining auto techs 
      Virtual sales manager Jay Barger
      'Glued to a phone': Acura store's virtual sales boss lifts deliveries, efficiency
      One man’s journey from homelessness to thriving dealer
      Bert Ogden Auto Group
      How a Texas group is cutting costs, saving millions
    • Why the pickup is the auto industry's 'battleground'
      Carlos Ghosn's quest to restore his reputation
      Why Ford must execute to avoid 'deep trouble'
      Why Honda is 'locked and loaded' for 2020
  • EVENTS & AWARDS
    • Events
    • Awards
    • Congress Conversations
    • Retail Forum: NADA
    • Canada Congress
    • Europe Congress Conversations
    • Fixed Ops Journal Forum
    • Shift: Mobility at a Crossroads
    • 100 Leading Women
    • 40 Under 40 Retail
    • All-Stars
    • Best Dealerships To Work For
      • Register for the 2021 Best Dealership To Work For
    • PACE Program
    • Rising Stars
    • Europe Rising Stars
  • JOBS
  • AN Solutions
  • +MORE
    • Leading Women Network
    • Podcasts
    • Webinars
    • In the Driver's Seat
    • Publishing Partners
    • Classifieds
    • Companies on the Move
    • People on the Move
    • Newsletters
    • Contact Us
    • Media Kit
    • RSS Feeds
    • Shift: A Podcast About Mobility
    • Special Reports Podcasts
    • Daily Drive Podcasts
    • AAM
    • Cars.com
    • DealerPolicy
    • Gentex
    • IHS Markit
    • Remember Group
    • Reputation.com
    • Ricardo: Dave Shemmans
    • Ricardo: Marques McCammon
    • Allstate: Want more from your F&I?
    • Ally: Navigating the future of automotive retailing
    • Amazon Web Services: Any place, any time, any channel
    • Amazon Web Services: The power of the cloud
    • Amazon Web Services: Universal translator: Harnessing sensor data to build better automotive software
    • Capital One Auto: Dealerships remain vital to an increasingly digital car shopping journey
    • DealerSocket: 5 steps to modernizing the buyer's journey
    • Epic Games: Real-time tech is the next frontier of automotive
    • Epic Games: Transforming the auto industry with digital assets
    • FTI Consulting: Crisis as a catalyst for change
    • Google: 5 trends shaping the auto industry's approach to a new normal
    • Google: Google's dealer guidebook helps dealers navigate today's digital landscape
    • IHS Markit: Automotive loyalty in the wake of the COVID-19 recession
    • IHS Markit: COVID-19: The future mobility delusion
    • Level5: 2020 Automotive E-Commerce Report
    • Motormindz: Toward hyperconnectivity: 5 ways to position your business to profit from connected car
    • Naked Lime: Bring social reputation together as part of big-picture marketing
    • Wells Fargo Auto: Switching gears from LIBOR to SOFR
    • Ally: Do It Right
    • DealerSocket
    • Deloitte: Cyber everywhere: Preparing for automotive safety in the face of cyber threats
    • Facebook: The road to a zero-friction future
    • Guide To Economic Development
    • PayPal Credit: How consumer financing helps drive sales for online auto parts retailers
MENU
Breadcrumb
  1. Home
  2. Dealers
November 23, 2015 12:00 AM

VW sinks, Detroit 3 rise in buy-sell reports

German brand gets mixed buyer reviews

Amy Wilson
Jamie LaReau
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print
    DEALERSHIP BUY/SELL

    Click here for Automotive News' Dealership Buy-Sell roundup.

    Kerrigan: Good returns possible

    The value of a Volkswagen dealership, already dismal due to low sales in the U.S., has plummeted further following the diesel-emissions scandal, said two buy-sell advisory firms' reports released last week.

    But VW's paltry value could make it a bargain for brave buyers who believe in the brand's ability to recover.

    "Certain aggressive buyers may be willing to acquire VW franchises at very low blue sky values with the expectation that the company will weather the storm," wrote Erin Kerrigan, managing director of Irvine, Calif., buy-sell advisory firm Kerrigan Advisors, in her quarterly Blue Sky Report. "If correct, these prescient investors will likely earn attractive returns on their investments."

    Meanwhile, the reports gave domestic brand dealerships rising valuations due to low gasoline prices that have spurred truck sales.

    Mark McLartyMcLarty Automotive Group

    "There was a question of, should we go back and change the deal?"

    Haig: VW "even less desirable"

    Domestic dealers "own luxury stores without having to pay the premium multiples to buy one, or deal with onerous facility requirements that the German OEMs often apply to their dealers," wrote Alan Haig in the Haig Report for the third quarter. He heads Haig Partners, a Fort Lauderdale, Fla., buy-sell advisory firm.

    Blue sky is the intangible value of a dealership, expressed as a multiple of adjusted pretax profit, and can vary enormously based on a dealership's location and other factors.

    In the year-ago third quarter, Haig's average blue-sky value for Volkswagen stores was 2.75 to 3.75 times earnings. At the end of 2014, Haig went to a dollar value instead of an earnings multiple. He now values VW's blue sky at $250,000 to $2.5 million, down from $500,000 to $3 million at the end of the second quarter.

    "Many VW dealerships are nominally profitable or losing money, so we don't see them trading for a multiple of earnings, but rather for a flat dollar amount based upon their potential for future profits," wrote Haig. "The cheating scandal has made this franchise even less desirable."

    Kerrigan's report lowered its range for VW's blue-sky value to 2 to 3 times earnings, from 3 to 4 times earnings a year earlier and 3 to 3.5 times at the end of the second quarter, before the scandal.

    Buyers have mixed views about holding a VW franchise in the wake of the scandal.

    Dealer Mark McLarty acquired a VW dealership as part of his purchase of eight stores from Joe Machens Dealerships in Missouri. He signed the deal right before the VW diesel crisis hit, then became concerned because the VW store was a key contributor to the group's total revenue. The store often sold more than 100 new VW vehicles a month.

    Volkswagen's lower values make dealer Tommy Baker's interest in buying a VW store stronger. "Volkswagen is going to be around," he says.

    "There was a question of, should we go back and change the deal?" McLarty, chairman of McLarty Automotive Group in Little Rock, Ark., told Automotive News. "Our answer was no," he said. "We have long-term confidence in VW and think a lot of good can come out of this."

    McLarty, who has had success with VW in his dealership groups in China and Brazil, added, "There might be more tactical buyers who are looking to buy low and sell high," but he is not that type of buyer. He said he is open to buying more VW stores because of his long-term investment approach.

    But another dealer, who asked to remain anonymous, was close to buying a VW store this year, he said. He worried that the store's units in operation and new-car sales wouldn't sustain the dealership long term, so he backed out of the deal.

    Blue sky values

    Advisers generally have raised their third-quarter blue sky values, given as a multiple of adjusted pretax profit, for domestic brands.
    Kerrigan's Blue Sky ReportFordCDJRChevrolet
    Q3 20154x to 5x4x to 5x4x to 5x
    Q3 20143x to 5x3x to 4x3x to 4x
    The Haig Report
    Q3 20154.5x to 5.5x3.25x to 4.25x3.5x to 4.5x
    Q3 20144x to 5x3.25x to 4.25x3.5x to 4.5x

    Then the diesel scandal broke. The dealer said he was relieved the deal did not happen after that, because he would have "overpaid for sure." He is still looking to buy stores, but he isn't interested in a VW franchise.

    The VW scandal illustrates the importance of franchise diversification, Kerrigan wrote.

    No one knows that better than the large private and public dealership groups.

    In October, for example, Asbury CEO Craig Monaghan said that domestic franchises were appealing. In fact, Asbury's last three acquisitions have been Ford stores.

    "It allows us to diversify into the truck business," said Monaghan. "Our business is very heavy car today. These are franchises that trade at a lower price point relative to many of the other stores in the marketplace."

    Asbury will continue to target domestic stores in truck-heavy markets, he said.

    The nation's largest auto retailer, AutoNation Inc., is buying big with domestic-brand and VW stores. So far it has closed or announced deals to buy 13 Chrysler-Dodge-Jeep-Ram stores, three Chevrolet stores, one Ford-Lincoln store, one Ford store and three VW stores. Of the $1.7 billion in added annual revenue through acquisitions announced by AutoNation this year, the majority -- $1 billion -- is from Fiat Chrysler Automobile brands.

    Tommy Baker, owner of Baker Motor Co. in Charleston, S.C., said lower values for Volkswagen make his interest in buying a VW store stronger, but he's not in active negotiations on any such deal now.

    "Volkswagen is going to be around," Baker said. "They're doing all the right things now to be able to correct the issue. They'll be fine. I certainly wouldn't be afraid to be a VW dealer today. Down the road, it will be a good franchise to have."

    RECOMMENDED FOR YOU
    Lithia completes deal for Michigan's Suburban Collection
    Related Articles
    Audi to revise emissions control software in U.S. vehicles with 3.0-liter engin…
    VW investigated in Germany for tax evasion on false CO2 levels
    Letter
    to the
    Editor

     

     

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    Lithia completes deal for Michigan's Suburban Collection
    Lithia completes deal for Michigan's Suburban Collection
    Monitor overseeing Prime's majority owner wants oversight to continue
    Monitor overseeing Prime's majority owner wants oversight to continue
    You may have won! But no
    Sponsored Content: Blueprint: Auto Sales In A New World – A Guide For Dealers In A New Normal
    Sign up for free newsletters
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    See more newsletter options at autonews.com/newsletters.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    Digital Edition
    Automotive News 4-12-21
    THIS WEEK'S EDITION
    See our archive
    Fixed Ops Journal
    Fixed Ops Journal 4-12-21
    Read the issue
    See our archive
    RETAIL TECHNOLOGY NEWSLETTER: Sign up for our Tuesday afternoon newsletter that breaks down the latest developments in how technology is changing the auto sales landscape.
    AUTOMOTIVE NEWS TV WITH TOM WOROBEC: Sign up for our afternoon newscast and catch up on the top news of the day with our brief video roundup.
    Get Free Newsletters

    Sign up and get the best of Automotive News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today

    Get 24/7 access to in-depth, authoritative coverage of the auto industry from a global team of reporters and editors covering the news that’s vital to your business.

    Subscribe Now
    Connect With Us
    • Facebook
    • Instagram
    • LinkedIn
    • Twitter

    Our mission

    The Automotive News mission is to be the primary source of industry news, data and understanding for the industry's decision-makers interested in North America.

    AN-LOGO-BLUE
    Contact Us

    1155 Gratiot Avenue
    Detroit, Michigan
    48207-2997

    (877) 812-1584

    Email us

    Automotive News
    ISSN 0005-1551 (print)
    ISSN 1557-7686 (online)

    Fixed Ops Journal
    ISSN 2576-1064 (print)
    ISSN 2576-1072 (online)

    Resources
    • About us
    • Contact Us
    • Media Kit
    • Subscribe
    • Manage your account
    • Reprints
    • Ad Choices Ad Choices
    • Sitemap
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Automotive News
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • HOME
    • NEWS
      • Dealers
        • Access F&I
        • Fixed Ops Journal
        • Marketing
        • Used Cars
        • Retail Technology
        • Sales
        • Best Practices
        • Dealership Buy/Sell
        • NADA
        • NADA Show
      • Automakers & Suppliers
        • Automakers
        • Manufacturing
        • Suppliers
        • Regulations & Safety
        • Executives
        • Talk From The Top
        • Leading Women Network
        • Guide to Economic Development
        • PACE Awards
        • Management Briefing Seminars
        • World Congress
      • News by Brand
        • Aston Martin
        • BMW
          • Mini
          • Rolls-Royce
        • Daimler
          • Mercedes Benz
          • Smart
        • Ford
          • Lincoln
        • General Motors
          • Buick
          • Cadillac
          • Chevrolet
          • GMC
        • Honda
          • Acura
        • Hyundai
          • Genesis
          • Kia
        • Mazda
        • McLaren
        • Mitsubishi
        • Nissan
          • Infiniti
        • Stellantis
          • Alfa Romeo
          • Citroen
          • Chrysler
          • Dodge
          • Ferrari
          • Fiat
          • Jeep
          • Lancia
          • Maserati
          • Opel
          • Peugeot
          • Ram
          • Vauxhall
        • Renault
        • Subaru
        • Suzuki
        • Tata
          • Jaguar
          • Land Rover
        • Tesla
        • Toyota
          • Lexus
        • Volkswagen
          • Audi
          • Bentley
          • Bugatti
          • Lamborghini
          • Porsche
          • Seat
          • Skoda
        • Volvo
        • (Discontinued Brands)
      • Cars & Concepts
        • Virtual reveals (Sponsored)
          • MITSUBISHI: 2022 Outlander
          • NISSAN: 2022 Pathfinder and 2022 Frontier
          • GENESIS: 2021 GV80
          • KIA: 2021 K5
          • LEXUS: 2021 IS
          • NISSAN: 2021 Rogue
          • TOYOTA: 2021 Venza and 2021 Sienna
        • Auto Shows
        • Future Product Pipeline
        • Photo Galleries
        • Car Cutaways
        • Design
      • Final Assembly
      • China
      • Shift
      • Mobility Report
      • Special Reports
      • Digital Edition Archive
      • This Week's Issue
    • OPINION
      • Blogs
      • Cartoons
      • Keith Crain
      • Automotive Views with Jason Stein
      • Columnists
      • China Commentary
      • Editorials
      • Letters to the Editor
      • Send us a Letter
    • DATA CENTER
    • VIDEO
      • AutoNews Now
      • First Shift
      • Special Video Reports
      • Weekend Drive
    • EVENTS & AWARDS
      • Events
        • Congress Conversations
        • Retail Forum: NADA
        • Canada Congress
        • Europe Congress Conversations
        • Fixed Ops Journal Forum
        • Shift: Mobility at a Crossroads
      • Awards
        • 100 Leading Women
        • 40 Under 40 Retail
        • All-Stars
        • Best Dealerships To Work For
          • Register for the 2021 Best Dealership To Work For
        • PACE Program
        • Rising Stars
        • Europe Rising Stars
    • JOBS
    • AN Solutions
    • +MORE
      • Leading Women Network
      • Podcasts
        • Shift: A Podcast About Mobility
        • Special Reports Podcasts
        • Daily Drive Podcasts
      • Webinars
      • In the Driver's Seat
        • AAM
        • Cars.com
        • DealerPolicy
        • Gentex
        • IHS Markit
        • Remember Group
        • Reputation.com
        • Ricardo: Dave Shemmans
        • Ricardo: Marques McCammon
      • Publishing Partners
        • Allstate: Want more from your F&I?
        • Ally: Navigating the future of automotive retailing
        • Amazon Web Services: Any place, any time, any channel
        • Amazon Web Services: The power of the cloud
        • Amazon Web Services: Universal translator: Harnessing sensor data to build better automotive software
        • Capital One Auto: Dealerships remain vital to an increasingly digital car shopping journey
        • DealerSocket: 5 steps to modernizing the buyer's journey
        • Epic Games: Real-time tech is the next frontier of automotive
        • Epic Games: Transforming the auto industry with digital assets
        • FTI Consulting: Crisis as a catalyst for change
        • Google: 5 trends shaping the auto industry's approach to a new normal
        • Google: Google's dealer guidebook helps dealers navigate today's digital landscape
        • IHS Markit: Automotive loyalty in the wake of the COVID-19 recession
        • IHS Markit: COVID-19: The future mobility delusion
        • Level5: 2020 Automotive E-Commerce Report
        • Motormindz: Toward hyperconnectivity: 5 ways to position your business to profit from connected car
        • Naked Lime: Bring social reputation together as part of big-picture marketing
        • Wells Fargo Auto: Switching gears from LIBOR to SOFR
        • Ally: Do It Right
        • DealerSocket
        • Deloitte: Cyber everywhere: Preparing for automotive safety in the face of cyber threats
        • Facebook: The road to a zero-friction future
        • Guide To Economic Development
        • PayPal Credit: How consumer financing helps drive sales for online auto parts retailers
      • Classifieds
      • Companies on the Move
      • People on the Move
      • Newsletters
      • Contact Us
      • Media Kit
      • RSS Feeds