Standalone 1-franchise stores hot in 2021

While the robust dealership buy-sell market of 2021 included four of the largest acquisitions in automotive retail history, it also included a wave of standalone single-franchise dealerships trading hands.

Automotive News tracked 382 buy-sell transactions that involved 707 dealerships trading hands in 2021. Of the stores sold, about a quarter — 186 — were standalone single-franchise dealerships.

Ford was the most popular brand in single-franchise dealership transactions in 2021, with 44 standalone stores selling, the Automotive News Research & Data Center found. Chevrolet at 23 was the second most commonly traded brand in a standalone store sale, with Toyota at 20, Honda at 16 and Nissan at 14 rounding out the top five.

Subaru followed at 13, Hyundai at 9, Kia at 8, Volkswagen at 6 and Mercedes-Benz at 5, completing the top 10.

Automotive News did not count standalone multifranchise dealerships, such as a Chrysler-Dodge-Jeep-Ram or Chevrolet-Buick-GMC store, in this data set.

Generally there are a higher volume of transactions involving domestic-brand stores simply because there are more dealerships across the U.S. featuring those brands, said Brady Schmidt, president of buy-sell firm National Business Brokers in Irvine, Calif.

As of Jan. 1, there were 2,445 standalone Ford dealerships in the country and 1,502 exclusive Chevrolet stores, compared with 1,077 exclusive Toyota stores and 1,004 standalone Honda dealerships, according to the Automotive News Research & Data Center.

Many first-time dealership buyers — former general managers, for example — may buy a standalone as their initial store. Oftentimes, those standalone stores are in rural areas.

"It's certainly easier for a first-time buyer to start with a single store to have only one manufacturer that requires manufacturer's approval, [and it's] less cash intensive, less floorplan, etc.," said Jesse Stopnitzky, a partner at Performance Brokerage Services, an Irvine, Calif., buy-sell advisory.

Stephanie Morris became a dealer last year with the purchase of a standalone Chevrolet store in Okmulgee, Okla., south of Tulsa.

Morris said she had previously spent a decade owning a service contract agency that provided training and finance and insurance products to dealerships in Texas, Oklahoma and Southern California.

Morris said she began looking for a dealership to acquire in June 2019 and considered several single-franchise stores.

She signed a purchase agreement for James Hodge Chevrolet in February 2020, but the transaction process was delayed because of the COVID-19 pandemic. Her first store purchase ultimately closed in May 2021.

"Being a member of the Choctaw Tribe, this dealership was attractive to me because this Chevrolet store is on the [Muscogee] Creek [Nation] reservation, directly adjacent from the headquarters of [Muscogee] Creek Nation," Morris told Automotive News in an email.

Morris, president of Stephanie Morris Auto Group in Dallas, followed up on the Chevrolet dealership acquisition with two standalone store purchases this year: a Nissan dealership in Sedalia, Mo., in March and a Nissan store in Durango, Colo., purchased in April.

Stopnitzky said there's "always a unique buyer" for a single franchise standalone store.

"Every buyer will value the same opportunity differently based on the uniqueness of the opportunity and how it may be a strategic fit for the group," Stopnitzky said. "We just sold a single-rooftop standalone Subaru dealership in Tucson, Ariz., and we sold it to Gee Automotive group with stores in Idaho, Oregon and Washington. This was their first venture out of the Northwest. That single-rooftop store was a top-performing Subaru dealership, and it was able to bring Gee Automotive Group into Arizona."

Strong relations between dealers and manufacturers also can have an impact on buyer demand for certain brands, according to Alan Haig, president of Haig Partners, a buy-sell firm in Fort Lauderdale, Fla.

"Many dealers told us that Toyota separated itself, distinguished itself during the pandemic, for the quality of information they provided to their dealers, to allow dealers to plan and act: 'Here's what you can expect to receive this month in terms of number of new units. Here's what you can expect to receive in the next quarter,' " said Haig, whose firm was involved in the sale of six Toyota dealerships over the past year. "And that allowed dealers to plan. And I think that there's always been a very high spirit of partnership between Toyota-Lexus and its dealer body."

Toyota's product portfolio also is getting fresher with redesigns of its Tundra full-size pickup and Sequoia large SUV, and the introduction of its bZ4X crossover EV.

"They have cars, they have trucks," Haig said. "You can spend $30,000 on a Toyota or $90,000. They have a really big range and they're very profitable businesses. So just about every dealer in the country would love to add a Toyota store to their business, their group."

Schmidt said popular vehicles, facility initiatives and having a lot of owners in the dealership network at retirement age can drive sales of particular brand stores.

"We're seeing a lot more interest in Kia and Hyundai, for example," Schmidt said.

Schmidt said facility initiatives, "particularly by Hyundai, are driving a lot of Hyundai dealers to consider selling. It's a big expense. A very, very large portion of Hyundai dealers are not at the current factory required facility initiatives."

Melissa Burden contributed to this report.