Mike Toth’s Post

Over the last 12 months (“LTM”), the average publicly owned dealership made $5.0M in pre-tax income, a 6.2% decrease from YE2023 and a 25.7% drop from 2022, the peak year, when the average dealership owned by the publics made an estimated $6.7M in pre-tax income. The performance of privately owned dealerships is highly similar, based on our involvement in a record number of transactions and the review of hundreds of such financial statements. We are likely to see further reductions in average store profits for the remainder of 2024 as new vehicle margins are falling faster than sales are increasing, and costs for floorplan, insurance, etc., remain elevated. Looking ahead, we expect that average dealership pre-tax income will continue to slide throughout 2024. It remains to be seen if profits will level off in 2024 or continue to decline further. There is much debate about where profits will normalize. Most dealers we're speaking to believe future profits will be at least 25% higher than pre-pandemic levels. Read more in the Q1 2024 Haig Report®: https://lnkd.in/ePWC9cKk #haigreport #dealershipprofits #dealershipbuysell #dealershipvaluation #dealershipbluesky

ICYMI: On page 17 of the Q1 2024 The Haig Report®, Haig Partners published an open letter to Elon Musk explaining why partnering with auto retailers/dealers could enhance Tesla's customer experience and provide Tesla with massive benefits. You can read the open letter to Elon in Automotive News: https://lnkd.in/eMKuwhc2 Dealers, we'd enjoy hearing your thoughts and opinions.

Transaction Announcement: Hollywood Kia Sold - Setting a Record for Highest Price Paid for a Kia Dealership! We are pleased to share that Haig Partners served as the exclusive sell-side advisor on the sale of Hollywood Kia, the #2 highest-volume Kia dealership in the nation, to Morgan Auto Group. Hollywood Kia is located in Hollywood, FL, and was owned by Joe Levy and Steve Gutstein. The sale of Hollywood Kia sets a record for the most blue sky value ever paid for a Kia dealership, according to Kia executives. When discussing the transaction, Joe Levy said, “It was a pleasure for our family to own Hollywood Kia for the past 16 years, but we have decided to focus our efforts on real estate development. The auto industry is becoming a more complex business where companies like Morgan Auto Group will thrive in the future. Larry “Captain” Morgan and I became friends during this process, and I know they will take good care of our people. My partner, Steve Gutstein, will be staying on to continue to run the dealership, and together, they will be a dream team for Kia. “I’m also grateful to my buy-sell advisors and lawyer who helped make this deal come together. Alan Haig, Derek Garber and Matt DeSantis of Haig Partners lived up to their impressive reputation. They have relationships with leading buyers around the country and they delivered in terms of price, confidentiality and speed. I’d also like to thank our attorney, Alex Kurkin of Kurkin Forehand Brandes LLP. Alex has been a trusted advisor to us for many years and he helped to make this transaction go very smoothly for us.” Please join us in congratulating Joe on the sale and Larry Morgan and Brett Morgan on Morgan Automotive Group's continued growth in Florida. https://lnkd.in/ea8DwuQJ

Q1 2024 outpaced any other quarter in automotive retail history in buy-sell transactions. Haig Partners reported that 151 dealerships traded hands, and 87% of those were sold to private dealers. Haig Partners predicts a busy 2024 "that could rival - or even eclipse - the number of dealership buy-sells that occurred during each of the past three years." Read more: https://lnkd.in/ePWC9cKk

Dealership Buy-Sells Set Record - More Dealerships Traded Hands in Q1 2024 Than Any Other Quarter in Auto Retail History! Highlights from the Q1 2024 Haig Report® include: --> The average publicly owned dealership made an estimated $5.0M in the 12-month period ended Q1 2024, a 26% drop from 2022. --> Despite the decline, average profits remain 2.5x higher than pre-pandemic levels. --> Q1 2024 was the most active first quarter on record for dealership M&A in auto retail history, with an estimated 151 dealerships bought or sold. --> Public company acquisition spending on domestic auto dealerships reached $1.3B, which was 14x higher than Q1 2023. --> Average estimated blue sky values remained at elevated levels in LTM Q1 2024, down just 18% from the market peak in 2022. The Q1 2024 release marks the 10th anniversary of The Haig Report®, which was first released in Q1 2014. Every quarter for the past decade, the team at Haig Partners has provided reliable, routine updates on trends within auto retail and their resulting impact on dealership values. The Haig Report® has gained a significant following since its inception in 2014, but its goal remains the same: to help buyers and sellers of dealerships make better, more informed decisions. https://lnkd.in/dC-eAjcN

What a conversation! TIME and Ally's 2024 Dealer of the Year, Rita Case, President and CEO of Rick Case Automotive Group spent some time with us in Fort Lauderdale. In talking with Alan Haig, she shares, among other things, her journey from her father's car repair shop to becoming a successful car dealer alongside her husband, Rick. They built their business through hard work, innovation, and a focus on customer satisfaction, implementing ideas like a 10-year, 100,000-mile warranty for Hyundai cars and creating a city-like experience at their dealerships. Additionally, Rita emphasizes the importance of community involvement, education, and balancing personal and professional relationships within a family business, offering valuable advice for aspiring dealers and setting goals for continued growth and success while prioritizing the well-being of their associates and community. https://bit.ly/3UG8Sw9

We carefully monitor the auto retail buy-sell market to assess the desirability of various franchises and overall market conditions. Our team has analyzed offers on transactions spanning hundreds of dealerships and regularly speak with leading buyers, attorneys, bankers and CPAs involved in other transactions. Our transaction experience combined with the bench of knowledge from the auto retail leaders on our team makes us one of the most trusted sources for establishing what a buyer would pay as a multiple of pre-tax profits for the blue sky of various franchises. That said, however, we stress to our clients that the multiple should be considered a baseline only. Sellers should not simply take the multiples and apply them to their current earnings to estimate goodwill. Market conditions are highly variable today, so having access to data from many other transactions that have occurred recently is essential to understand and predict value. Read more in the the Q4 2023 Haig Report®, auto retail's most trusted quarterly M&A report: https://bit.ly/3PKeio1