Dealership buy-sell activity plummeted in the first quarter from year-earlier levels. But buy-sell advisers are confident sales will rebound.
Amid softer new-vehicle sales, dealership prices are slowly declining, buy-sell advisers say. Lower prices and tax reform could bump up the volume of deals by year end, they add, noting that public and private auto retailers as well as outside investors continue to look for deals. In addition, publicly owned retailers have more cash on hand after sharply curtailing stock buybacks.
"Buyers continue to be excited about auto retail so values remain strong for attractive deals, although they are increasingly picky and over-priced deals get little interest," wrote Alan Haig, president of Haig Partners in Fort Lauderdale, Fla., in his quarterly Haig Report.
"The first quarter of last year was a particularly big quarter, and this quarter was weak," Haig told Automotive News. "From our own experience, there's a lot going on. Lithia bought a deal, and there are other deals being done that are not in this quarter's data but we know are coming."
Lithia Motors Inc., of Medford, Ore., purchased Baierl Auto Group in Pittsburgh this month.
Still, Haig predicted this year's volume of deals will be slightly down from 2016 because "we're already in a bit of a hole."
But he added, "I feel confident that subsequent quarters will be better than Q1."