The Kinsel family has been in the car business for more than 100 years in Texas, owning and operating dealerships throughout the state and ultimately, in 1944, settling in Beaumont with Toyota, Ford, Lincoln and Mazda (and at one time Porsche, BMW and Audi) stores. The Kinsel family decided to sell Kinsel Motors in 2023 to Houston-based Doggett Automotive Group. Kerrigan Advisors had the opportunity to interview Joe Bob Kinsel and his son and partner, Craig Kinsel, about their reasons for selling the family business, as well as their perspectives on the auto retail industry and its future.
Kinsel Motors: A century-long legacy sold to Doggett Automotive Group - Family’s perspective on the sale and the future of auto retail
Interview with Joe Bob Kinsel and Craig Kinsel, Owners
What prompted you to sell your valuable dealerships in southeast Texas in 2023?
Joe Bob Kinsel: We have been in the car business for four generations, and our family dynamics did not include a fifth generation taking over. After lengthy discussions with my three sons, this lack of a succession plan, coupled with market conditions and potential threats to the dealer model with electrification, led us to decide the timing was right for us to monetize the business.
Craig Kinsel: After four generations spanning 100 years, we decided the timing was right. We didn’t have a clear plan for a fifth generation to take over and had some concerns about the long-term future of the retail car business.
What surprised you about the sale process?
Joe Bob: We were very pleasantly surprised by the professionalism and due diligence that went into selling our family business, which was quite different than our experience using other brokers over the years. There were no redacted balance sheets and income statements being tossed around. The thoroughness of the work completed by Kerrigan Advisors before going to market gave us great comfort, knowing we were in the right hands to move forward with a sale.
Craig: We were surprised at how much work went into the due diligence part of the process. The Kerrigan team’s expertise on navigating this process made it extremely efficient and valuable in getting the deal done.
As a family-run business, what was the hardest part of the sale?
Joe Bob: There were a lot of emotions involved in selling our more than 100-year-old business that has taken care of Kinsels for a long time. We underestimated how hard it would be and the fact that we were no longer going to be associated with our employees, who were the backbone of our business, and all the many customers who supported us tremendously over the years. We had to give this a lot of thought, knowing we would miss Kinsel Motors a great deal.
Craig: Hands down, the most difficult part of this process was ending the long-term working relationships with our co-workers. We prided ourselves on having the best people in the business, and these same people helped put us in a great position to sell.
What do you think will be the biggest challenges and opportunities for private, family-owned-and-operated dealership groups over the next decade?
Joe Bob: In my 53-year career in the car business, a lot of challenges and opportunities have come along. Different political environments, geopolitical conflicts, oil embargoes, price caps from former President Richard Nixon, runaway inflation, extremely high interest rates – the list goes on and on. Dealers are so entrepreneurial, and their work ethic is so good that despite all the challenges ahead in the next decade, dealers have proven they can power through, make a good living and provide a lot of opportunities to their employees and the community. If dealers keep working hard and paying attention, they will do just fine over the next decade.
The biggest challenge is the possibility that the dealer will lose personal contact with the customer. I think you need to have an association with a sales and service department that is not completely digital and impersonal. The biggest opportunity is to not get bogged down by the negative news of potential looming business-model changes. Just pay attention, take care of the customer and your employees and keep selling cars, because the factories do not know how to do this. I often think of the factories trying to replicate the showroom floor or service drive on a Saturday. We recognize that each customer has different needs, and dealers know how to tailor the car buying and servicing experience to the consumer better than anyone.
Craig: Going forward, I think the biggest challenge for dealership groups the size of ours will be scale. There are many issues that benefit the larger dealer groups. I definitely think this trend will continue, and the bigger groups will continue to grow by acquiring smaller groups like ours.
How do you feel the industry has changed in recent years relative to your 100-year history?
Joe Bob: The process of selling a car has become more complicated because of federal and state regulations. We also have had to adapt to a broader customer base – younger people like to use technology because it is second nature to them. But that process doesn’t work for our older customers. Despite the increased complication and onset of technology, more things have stayed the same than have changed. We still have to sell each car, one at a time.
Craig: Technology definitely has had a huge impact in the auto industry. It has made everything quicker and more transparent. I also believe that customers today demand a much-improved experience when dealing with a dealership, compared to the past.
Do you expect to see more consolidation in our industry?
Joe Bob: Scale is playing a role in the dealership world these days with employee benefits, advertising and brick-and-mortar investments. Dealers, both public and private, have bigger balance sheets now than they ever have. With the cash they are sitting on, even with higher interest rates, they know the best way to put their money to work is to invest in a business they already know, love and understand. Consolidation will be fueled by strongly positioned private and public groups looking for economies of scale and strong returns.
Craig: 100% yes. There will continue to be cycles, but I truly believe that big dealer groups will continue to grow by acquiring smaller groups.
What are your thoughts on how electric vehicles will impact the auto retail business model?
Joe Bob: Clearly, the factories would become online-only if they had their way, and they would also take out the bargaining aspect of buying a car. If they are right on both of those counts, then the business model will fundamentally change with EVs. While I think that EVs are going to take over a chunk of new-car sales, I don’t think they’re going to be nearly as pervasive as the media and factories are saying. The factories’ EV plans are playing to the media, the public and Wall Street; they do not want to come across as “left behind.” You can witness this by the fight that Toyota has had recently, trying to defend their more conservative approach as opposed to the other OEMs. While I think EVs are here to stay, especially as technology improves, I don’t think EV sales are going to be as fast or prevalent as people are predicting.
Craig: I think EVs are here to stay. With advancing technology, government help and increasing demand, the sale of EVs will continue to grow. However, I do not believe that the sales will grow at the rapid pace some predict. I believe that internal-combustion engines will continue to make up the majority of sales for the foreseeable future.
Where do you see dealership earnings normalizing – higher, lower or the same as earnings during the pandemic?
Joe Bob: With more supply and higher floorplan expenses, dealers will need to pay closer attention to their operations and expenses to maintain post-pandemic earnings. I think that dealers who work hard, stay entrepreneurial and take care of customers and employees will do just fine in terms of profitability.
Craig: I believe that earnings will normalize to pre-pandemic levels in the next few years.
Why did you choose Kerrigan Advisors to advise you in your sale?
Joe Bob: My sons and I have all enjoyed reading Kerrigan’s quarterly Blue Sky Report® for years. It gave us a lot of confidence in monitoring the value of our main family asset and trends in the marketplace. When we entered into the process to sell, there was no other decision about who to contact. Kerrigan Advisors was a given. And our experience working with them exceeded all of our expectations. We would recommend that any dealer engage Kerrigan Advisors when contemplating a sale.
Craig: It’s pretty simple, really: We researched who was the best in the industry. I know we made the correct move by choosing Kerrigan Advisors. I can’t say enough about how helpful and integral they were in getting us a great deal and being right by our side during the entire journey.
Kerrigan Advisors is the nation’s premier sell-side advisor and thought partner for higher value dealerships and dealership groups. In addition to publishing The Blue Sky Report®, The Kerrigan Dealer Survey, and The Kerrigan Index ™, the firm leads the industry in the highest sale price per transaction of any firm. We attribute our firm’s success to our laser-focus on fulfilling each client’s personal and financial goals. In our view, dealerships are far too valuable to be advised any other way.