With dealership buy-sell activity heading for a likely record in 2021 as industry consolidation heats up, dealers and a dealer lawyer say the frenzied deal pace shows no signs of letting up heading into 2022.
The flurry of transactions is happening as dealers weigh whether they should sell, given high store valuations and industry shifts on the horizon, or join the consolidation trend and acquire to get bigger, they said during an Automotive News Retail Forum: Dealer Discussions panel last week.
Dealership consolidation has accelerated this year with several megadeals announced as public auto retailers buy some of the country's largest privately owned dealership groups. Lithia Motors Inc. in April bought Michigan's Suburban Collection, adding 34 stores. Group 1 Automotive Inc. plans to buy 30 stores from Prime Automotive Group by late November, Sonic Automotive Inc. plans to buy RFJ Auto Partners Holdings Inc. in December and Asbury Automotive Group Inc. plans to buy Larry H. Miller Dealerships by year-end.
So are there any more megadeals left in the industry?
"There's probably a couple more out there, but I think a lot of the consolidation will be a little smaller and just more volume of deals and not these big whales that are being landed currently," said Stephen Dietrich, a partner with the Holland & Knight law firm in Denver.