US auto dealership chains seeking to expand networks

Article by Christian Andrei, on March 18, 2011

As the U.S. auto market recovers, auto dealership chains are looking to expand their networks by acquiring new stores and paying pre-recession multiples on acquisitions.

According to four dealership brokers surveyed by Bloomberg, AutoNation Inc., Penske Automotive Group Inc. and Group 1 Automotive Inc. are paying 3 to 5 times earnings before interest and taxes for acquisitions after failing stores were sold during the recession for book value or scrappage prices.

U.S. new-vehicle sales dropped to a 27-year low of 10.4 million in 2009 but for 2011, they’re predicted to increase to 12.9 million. Gary Silberg, who leads KPMG LLP's U.S. automotive practice and is based in Chicago, said that the economic environment “bodes well for dealer M&A activity."

He explained that when one doesn’t know what sales will come to, it makes it difficult to do a deal. But he said that there’s now stability and growth. Last month, auto-dealership consultant Urban Science said that new-vehicle sales per U.S. dealership this year may increase to levels reached before the recession.

The firm said that sales per dealer could reach those levels with 3.2 million fewer industry deliveries than in 2007 since carmakers, led by General Motors Co. and Chrysler Group LLC, shut down locations as part of their bankruptcies in 2009.

This month, AutoNation, the largest U.S. auto retailer, acquired a Toyota Motor Corp. namesake brand store in Fort Myers, Florida, which claims to have annual sales of about $135 million.

Topics: united states

If you liked the article, share on:

Comments

Login or Create new account to add a comment!

Recommended

Hyundai is making the green vehicle race more competitive by offering three powertrain types -- pure electric (EV), hybrid (EV plus combustion engine) and plug-in hybrid (PHEV) – in one...
by - December 9, 2016
Although specs for the new Renault Megane had already surfaced several weeks ago, we didn’t know that the company has cooked up something new. Aside from the 200hp gasoline, Renault‘s...
by - December 9, 2016
For the first time in fifty-eight years, Infiniti registers its first US-Spec Q60 Coupe in Cuba. American products have not been allowed entry into Cuba for six decades. But it...
by - December 9, 2016
Chevrolet has already given out the pricing for some of its 2018 Equinox models. Not only will the new Equinox be available in both the US and Canada, it is...
by - December 9, 2016
Nearly all details have been set with regards to the upcoming market introduction of the new Jaguar I-Pace. Its production version was recently previewed at the 2016 Los Angeles Auto...
by - December 8, 2016
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries