Excessive income have auto dealerships promoting like hotcakes.
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Auto sellers are knocking on wooden, however up to now, nothing a lot appears to be making a dent within the present streak of report income for U.S. auto dealerships, or the urge for food that rising dealership chains have for buying much more dealerships.
“Retailers haven’t been damage by latest financial headwinds akin to greater rates of interest, greater fuel costs, greater inflation and declining GDP, demonstrating the energy of the auto retail enterprise mannequin,” mentioned the newest Haig Report.
Haig Partners LLC, Fort Lauderdale, Fla., is a agency that brokers dealership acquisitions, known as “buy-sells” within the auto retail commerce.
“The primary quarter of 2022 could convey auto sellers their highest income ever,” mentioned Alan Haig, president of Haig Companions, within the lately revealed Haig Report for the primary quarter of 2022. “This can be a uniquely good time to be an auto supplier.”
Countering all these financial headwinds is an ongoing scarcity of recent automobiles, largely due to a scarcity of laptop chips utilized in fashionable vehicles to handle digital options and choices.
And earlier than the chip scarcity, which began to noticeably restrict new-vehicle manufacturing over a yr in the past, there have been pandemic-related shutdowns within the spring of 2020, which stopped new-vehicle manufacturing completely, adopted by a gradual ramp-up.
The mix of low provide and excessive demand has pushed new-vehicle transaction costs to report or near-record ranges. In line with TrueCar, the average transaction price in Could is projected to be $44,254, up 14% vs. a yr in the past and about even with April 2022.
These excessive retail costs and excessive dealership income have made automobile dealerships a sizzling commodity. Haig Companions estimates a report 640 U.S. dealerships have been purchased and bought in 2021, vs. 344 in 2020.
What’s extra, excessive costs are projected to proceed for the subsequent couple of years, even assuming the chip scarcity begins to ease, as a result of it’s going to take that lengthy for provide to meet up with demand.
