Interest in Vw dealerships in the United States is high due to high sales

Article by Christian A., on October 23, 2012

It’s no surprise that so many have become interested in acquiring VW dealerships in the U.S. It’s mainly due to the high sales that the brand has achieved in this market. Frank Trivieri, executive vice president of sales at Volkswagen of America, said that 55 VW stores have changed ownership in 2012, about 50% higher than in the full year of 2011.

He said that the interest for the VW franchise is high. As examples, Trivieri named four public dealership groups Group 1, AutoNation, Sonic and Penske Automotive) that have ignored the brand in the past.

Presently, VW has 607 U.S. dealerships. Of this figure, only 22 are owned by public groups. However, Group 1 has acquired 6 VW stores during the last 1.5 years and so far, it has eight and wants to get more.

Pete DeLongchamps, Group 1's head of financial services and manufacturer relations, said that its relationship with the management is “very good” and that VW’s dealership represents a “good value proposition."

According to Alan Haig, managing director of dealership broker Presidio Group, VW has climbed up the ranks and is now considered one of the most acquired franchises by the 10 biggest dealer groups this year.

He said that the focus of the leader dealerships had been on Honda, Toyota, BMW and Mercedes rather than VW. But this has changed as VW's sales per franchise have gone up.

Haig said that blue-sky multiples, which reflect the intangible value of a franchise on top of the bricks-and-mortar value, are between 4.0 and 4.75 times adjusted pretax income, when compared to about 2.0 four years ago. He said that VW's blue-sky multiple right now is about the same as that of Hyundai, Kia and Nissan but it’s still lower than Honda and Toyota, which bear multiples of 5.0 to 5.75.

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