Haig Partners Releases Q4 2024 Report on Auto Dealership M&A Activity: Continues to be Strong

In 2024, the automotive retail industry saw a high level of activity in terms of mergers and acquisitions. A total of 510 dealerships changed ownership during the year, making it the fourth busiest year on record for dealership M&A. This influx of transactions indicates a dynamic market with plenty of movement and changes taking place.

One of the key factors that drive dealership M&A activity is the value of blue sky. Blue sky value refers to the intangible assets of a dealership, such as its reputation, customer base, and brand recognition. Buyers are often willing to pay a premium for these intangible assets, especially if they believe that they can leverage them to increase profitability and market share. The high number of dealership transactions in 2024 suggests that many buyers see value in acquiring established dealerships with strong blue sky value.

Another factor contributing to the active dealership M&A market is the desire for consolidation and scale. Larger dealership groups are often able to achieve cost savings and efficiencies that smaller, independent dealerships cannot. By acquiring smaller dealerships and incorporating them into their existing operations, larger groups can expand their geographic reach, increase their market share, and improve their overall competitiveness. This trend towards consolidation is likely to continue driving dealership M&A activity in the future.

In addition to consolidation and blue sky value, changing market conditions are also playing a role in driving dealership transactions. The rise of electric vehicles, autonomous driving technology, and changing consumer preferences are all shaping the future of the automotive industry. Dealerships that are able to adapt to these changes and stay ahead of the curve are likely to be more attractive to buyers, leading to increased M&A activity.

Overall, the high level of dealership M&A activity in 2024 is a reflection of the dynamic and competitive nature of the automotive retail industry. Dealerships are constantly seeking ways to improve their operations, increase profitability, and stay ahead of the competition. This drive for success is leading to increased consolidation, as well as a focus on acquiring dealerships with strong blue sky value. As the industry continues to evolve, we can expect dealership M&A activity to remain strong and continue to shape the future of automotive retail.