Kia stores are a hot ticket for retailers

In an active dealership buy-sell market in the U.S., one mass-market brand is rising to the top of many buyers' wish lists, brokers say. It's Kia.

Once known for its economically priced models with subpar quality and ho-hum styling, the Kia narrative has shifted through improved vehicle quality and dependability and the launch of nameplates such as the Telluride large crossover and EV6 electric compact crossover.

The Korean brand from Hyundai Motor Group has one of the freshest product lineups in the industry and is poised to build out its offerings of electric vehicles in the coming years.

And now interest in Kia stores is so strong the brand is being mentioned in the same realm as other acquisition blue bloods such as Honda, Toyota and Porsche, dealership brokers say.

Joe Ozog, president of Ozog Consulting Group in Scottsdale, Ariz., said he has been calling on dealers at the end of each quarter for more than 20 years to see what their target brands are. Recently, for the first time, he said, Kia made the top three most requested brands.

In February, Ozog's firm represented the sellers in the sale of a Kia store in Lufkin, Texas. Some younger dealers think Kia is the next Toyota, he said.

"Ten years ago, there was the Kia-Hyundai stigma," Ozog said. "This generation doesn't have a Kia-Hyundai stigma. They look at it as how Toyota and Honda were 10 years ago."

It's a similar situation for Alan Haig of Haig Partners, a buy-sell firm in Fort Lauderdale, Fla. In the past, Haig said, his firm would hear dealers say they were only interested in buying stores selling such brands as Honda, Toyota, BMW, Lexus, Mercedes-Benz and Porsche.

"Now we're hearing Kia included in that conversation as a brand that they want to have if they don't yet have it, or they have one [and] they want to have another one," Haig said.

In its fourth-quarter Haig Report, the firm said that Kia dealership values rose.

Automotive News has so far tracked five Kia dealerships trading hands in 2023. Tim Lamb Group, a buy-sell firm in Columbus, Ohio, said it represented Coughlin Automotive Group in the purchase of two Kia dealerships in Ohio on Jan. 5, while Randy Marion Automotive Group bought a Kia store in Salisbury, N.C., in March.

At least 27 Kia dealerships, or about 3.5 percent of the brand's 775 stores, changed hands nationwide last year, Automotive News estimated, while it tracked 24 Kia dealerships that changed hands in 2021.

Mike Sims, president of buy-sell firm Pinnacle Mergers & Acquisitions, in Frisco, Texas, said that not long ago, if a Kia dealership was part of a group, a buyer might have reluctantly agreed to take on the brand.

"But now I don't know anybody that would not like to have" a Kia dealership, Sims said.

Ken Ganley, CEO of Ken Ganley Automotive Group, of Broadview Heights, Ohio, bought his first Kia dealership, a store in Medina, Ohio, in 2020. Last year, his group bought four more Kia dealerships across Ohio and West Virginia.

While the group has gone through other periods of acquisitions, Ganley said buying this many dealerships of the same brand is unique for his company.

"I love the brand," he said. "I love what they've done with the vehicles, with the marketing. I think the executive management is fantastic. I think our regional management, in both the central region and the southern region, are outstanding. They've got the right people, they've got the right cars, they've got the right message. It's all fitting together."

On the most recent National Automobile Dealers Association's Dealer Attitude Survey, Kia rose one spot to No. 6. The survey serves as an NADA report card on dealers' relationships with the automakers they represent.

Ganley said his group is in the process of updating the signage of its Kia dealerships to reflect the brand's new logo, and the front of each store is getting a new black-and-white exterior.

Ken Ganley Automotive ranks No. 15 on Automotive News' list of the top 150 dealership groups based in the U.S., retailing 36,079 new vehicles in 2021.

Morgan Automotive Group, of Tampa, Fla., bought two Kia dealerships in Florida from LMP Automotive Holdings in December and another Kia store, also in Florida, from Fuccillo Automotive Group last May.

The group now has seven Kia dealerships in its portfolio.

"The [Kia] blue sky multiples are fairly reasonable," CEO Brett Morgan told Automotive News on the sidelines of the NADA Show in January. "A lot of the Kia stores that we've acquired were good new-car retailers, but there was upside in service, parts and used cars. Kia has been really good to deal with and they've been able to get dealers cars. Kia has done a good job, I think, of creating great products that customers want to buy but also being able to produce and deliver vehicles to the dealer."

Morgan Automotive Group ranks No. 8 on Automotive News' list of the top 150 dealership groups based in the U.S., with sales of 60,951 new vehicles in 2021.

Willie Beck, managing director at Bel Air Partners, a buy-sell firm in Hopewell, N.J., said the company helped sell Sussman Kia in Jenkintown, Pa., north of Philadelphia, in January, to Matt Blatt Dealerships, an existing Kia dealer. Bel Air Partners has another Kia dealership listed in the Northeast, Beck said.

"We're getting a lot of focus from existing Kia dealers because they understand the economics of the brand, and how it has improved the quality of the vehicles [and] the beginning of the increase in service absorption with the units in operation increasing," Beck said. "So all great trends overall for the brand and maybe not as appreciated by someone that doesn't have the brand right now versus someone that already does."

Ganley said that he continues to look for additional Kia dealerships.

"Did I start out saying to myself in '19 or '20, 'Boy, I'm gonna go on a run with Kia'? I don't know that I really did that," Ganley said. "But it just seems to have worked that way."