NADA’s 2024 conference ended on a high note. Many of the dealers and advisors we spoke to were exhausted from all the events and conferences they attended, but left feeling satisfied with the outlook for this year, especially the buying and selling opportunities for dealers. Below are the results of a completely unscientific survey of the main things we heard in Las Vegas.
1. Expected profits in 2024 are lower than the peak of the coronavirus, but remain attractive
The high peak dealer earnings of 2021 and 2022 are clearly over, but most dealers are not pessimistic as 2024 earnings are still expected to exceed pre-coronavirus earnings. .
2. More stores will open in the market due to the exodus of “boomer” dealers
Although there are exceptions, many dealers in their 60s and 70s are considering retirement, especially as the industry moves toward electric vehicles and the sales process moves online. However, unlike in previous years, many of the stores that are up for sale will likely be in good financial condition, as sellers who are withdrawing due to poor store performance will not necessarily be selling.
3. Put additional stores up for sale through “appropriate sizing” of the mid-sized retailer group
The 10-20 rooftop sales outlets, which have increased the number of stores over the past few years, are now closing down some of their stores to better align their business strategy with the number of experienced managers in sales, finance and fixed departments. We are reviewing and reducing the load on stores. operation. Some of these dealers may be too thin from recent acquisitions to effectively manage all of their rooftops without adding experienced managers.
4. Further opportunities for external investors to partner with experienced operators
The next generation of dealers made their presence felt at NADA 2024. For many of these emerging dealers, their success is closely tied to their expertise and collaboration with outside investors. But such investors must be willing to trade the operational control they typically receive in other industries for door-in-door access to OEMs, especially luxury brand factories.
5. Some factory EV strategies that give buyers pause
Several participants we spoke to believe that battery EVs (“BEVs”) do not represent the immediate future for customers due to range concerns. Factories like Ford that focus on BEVs at the expense of plug-ins, hybrids, and even hydrogen-based vehicles run the risk of seeing their dealers’ value decline in the eyes of many prospective buyers. there is.
6. Buyers are paying more attention to social media “assets”
A growing number of purchase and sale agreements are focused on ensuring that the value of the goodwill generated by a dealer’s social media accounts is retained by the dealer’s buyer. However, based on how social media companies manage their business accounts, it’s difficult to develop a viable plan for gaining that goodwill.
Gurpartap (Gio) Singh also contributed to this article.