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Dealership buy/sell update: It’s a buyer’s market but sellers don’t know it

November 18, 2010

Domestic dealerships continued to be the drivers of buy/sell activity during the first quarter of 2006, said the president of the Apex Group, a firm that develops buy/sell packages for its dealership clients.


Greg Gilmore said that, despite what dealers may have heard, "overall valuations of dealerships have actually remained consistent with last year. Any difference in multiples is attributable to individual franchises. Valuations for Toyota, Honda, BMW, and Lexus continue to climb, while goodwill for domestic dealerships appears to have settled in at 1.5 to 2.5 times actual earning potential before taxes."


That means there still is plenty of opportunity for savvy dealer operators in the market for expansion.


For automotive manufacturers looking to extend their market presence, Gilmore sees Hyundai as "the industry’s most aggressive manufacturer" with respect to adding new franchise points.


Dealership buy/sells have become considerably more complicated, with the rising cost of prime real estate, factory "image" programs, and ballooning floor plan expenses posing more important considerations in negotiating dealership transaction prices.