Location, brand and succession plans are among the factors that play into the future of dealerships.
Jim Henry | Mar 03, 2023
DALLAS – Can “Mom & Pop” dealerships survive in the current era of auto retail consolidation, or has every local market reached the point of “grow, or die?”
The answer, naturally, is that “it depends,” according to panelists at a recent Auto Team America conference.
It depends on the brand, it depends on the market, it depends on whether ownership has a succession plan, and it depends on whether the owners even want to stay in business or sell out to take advantage of today’s sky-high seller’s market, say industry insiders.
“A Toyota store anywhere in the country is probably going to be fine. A high-volume, single-point store is probably going to be fine,” says dealership broker Alan Haig, president of Haig Partners, Fort Lauderdale, FL. But the outlook is different for “a typical store in a typical town,” he says. Without a strong brand, or without a market that somehow lacks much local competition, he says the typical small operation is likely to slowly “bleed away” its business to bigger competitors.
In a separate talk with Wards, a Haig competitor says something similar: “Sure, if it’s a Toyota store,” dealership broker Erin Kerrigan says when asked whether small dealerships can survive. Kerrigan is founder and managing director of Kerrigan Advisors, Irvine, CA.
In a recent report, Haig Partners rates Toyota No.1 among mass-market brands, after luxury brands Porsche, Lexus, Mercedes-Benz and BMW, in terms of the multiple which buyers are willing to pay, times earnings, to purchase a franchise. Honda and Subaru also rank highly.