Haig Partners has released its year-end 2020 report which tracks trends in auto retail and how it impacts dealership values.
“It has been a year since the pandemic caused dealers to severely curtail operations in March of 2020. After a two-month lull, demand roared back and the average dealership generated 34 percent higher profits (excluding PPP) than in 2019, reaching the highest level on record,” Haig said in the report. “This rebound in profits resulted in an upshift in interest for acquiring dealerships from both private and public dealer groups.”
“Last year was the best of times and the worst of times,” commented Alan Haig, president of Haig Partners. “We went from the most severe economic contraction in our nation’s history to a period when dealerships reached record profitability. Our nation mourns the vast personal losses that many suffered during the pandemic. Still, we are grateful dealers were able to maintain most of their staffs, keep them safe, and provide essential services to their customers.”
The company also stated that buy-sell activity had surpassed pre-COVID levels.
Some additional key findings in the company’s report included:
- Buy-sell activity in 2020 finished 15 percent higher than 2019, even though closings almost completely halted in April and May.
- Public equity valuations are 107 percent higher than they were before the pandemic.
- Haig saw a spike in Q4 2020 when 104 dealerships change hands, a 33 percent increase as compared to 2019.
- The amount of spending by public companies exploded in 2020, reaching a total of $2.5B on domestic acquisitions, primarily attributable to Asbury and Lithia.
The company said it expects the robust conditions to continue through the remainder of 2021.
