Welcome to another edition of the Car Dealership Guy Podcast Recap newsletter—the key lessons from top operators, founders, and execs shaping the future of auto retail.
Today's guest is Alan Haig, President at Haig Partners.
We dive into current M&A market dynamics, tariff impacts on dealership valuations, and why private consolidators are outpacing public groups in acquisitions.
Private buyers are dominating while public companies pull back.
M&A activity shows a dramatic shift as public groups redirect capital away from acquisitions despite strong available opportunities.
"The number of dealerships acquired by public companies is down this year. Year-to-date, they bought 13. Last year through the second quarter, they bought 22."
Public companies are choosing stock buybacks over dealership purchases, creating a massive opening for private consolidators to grab market share while competition is reduced.
Toyota values hit 7-8x as Asian imports surge ahead.
Strong-performing Asian brands are driving increased buyer competition and higher acquisition multiples.
"We increased the bottom end of the range for, or I think it's both ranges for Hyundai and for Kia. Those brands continue to perform well."
Toyota received upward adjustments alongside Hyundai and Kia, with their mixed powertrain strategies and reliability reputations driving sustained consumer demand and dealer profitability.
GM dealers are reporting the best product lineup in company history.
Domestic brands are showing surprising strength despite industry challenges, with focused product strategies delivering exceptional results.
"Last quarter we highlighted General Motors, Chevrolet in particular, well really all the brands that were doing really well, and dealers were telling us that they'd never seen a better product mix, better product lineup for those brands."
The truck and SUV focus has created unprecedented margins and customer satisfaction, proving that strategic product curation can overcome market headwinds.
Audi is taking the biggest valuation hit in Haig Partners’ history.
Import-dependent brands face severe market pressure as tariff policies create unprecedented uncertainty for zero-US-production manufacturers.
"We lowered our blue sky multiple on Audi on the top and the bottom of the range by one and a half turns. That's the biggest move that I can remember us ever making for any brand."
The dramatic 1.5-turn reduction reflects both declining market share and complete vulnerability to import tariffs, making Audi the poster child for tariff exposure risks.
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Carvana's franchise experiment is crushing traditional dealers.
The digital retailer's first franchise location demonstrates how technology-first approaches can dominate even in traditional dealership formats.
"This is yet another threat, if you will, to franchise dealers. Maybe it's also competition, steel sharpened steel. So maybe this will be a lesson, if you will, if you're watching Carvana take a small store and make it into a big store."
Their Arizona CDJR store jumped from last to third place by eliminating doc fees and leveraging Stellantis' inventory surplus to scale rapidly.
Dealer profits are landing 75% higher than the pre-COVID baseline.
Current earnings levels provide a substantial cushion against external pressures while maintaining a strong acquisition appeal for buyers.
"The total profits that dealers have been making peaked in 2023. It's been coming down quarter by quarter, but it's kind of leveled off. And the good news is it's leveled off at a value that's about 75% higher than the profits we were making in 2019 before COVID hit."
This profit cushion helps explain continued buyer confidence, despite tariff uncertainty and political volatility affecting other investment sectors.
Dealer network consolidation is delivering instant 30% profit boosts.
Oversized dealer networks create immediate value creation opportunities through strategic market consolidation among surviving stores.
"We had a dealership, let's call it a Honda store, and a Metro, let's just call it Atlanta. If Honda decided to add another dealership near ours, a contiguous point, we would lose about 30% of the profit over the next three years."
The inverse effect means closing one competitor can increase remaining dealers' profits by 30%, making consolidation plays extremely attractive for strategic buyers.
Struggling brands are losing their best people to competitors.
Volume declines create vicious cycles where top performers abandon underperforming franchises for higher-throughput opportunities across the street.
"The used car manager at Nissan becomes the used car manager at Honda or Toyota or Mazda or Subaru or Kia or Hyundai. And he's taking with him knowledge and probably some of his people."
This talent migration accelerates performance deterioration at struggling stores while strengthening already successful competitors in the same markets.
Distressed dealership opportunities are surging across multiple brands.
Market winners and losers are creating distinct buying opportunities as pandemic effects fade and underlying brand strength becomes apparent.
"As the effects of the pandemic wore off, a lot of stores began to tip over from making money to losing money. And certain brands in particular have been suffering more than others."
Nissan, Infiniti, and Stellantis represent the primary distressed opportunities, offering entry points for independent operators and consolidation plays for existing dealers.
Tariff uncertainty is creating bid-ask spread opportunities.
Political uncertainty is widening valuation gaps while actual economic impact remains minimal, creating negotiating leverage for prepared buyers.
"I think the ask right now has been higher than the bid so far this year. But as we see the year progress and as profits are strong, I think the bids are going to start to come up again."
Smart buyers are using uncertainty as negotiating leverage while vehicle prices haven't actually risen significantly, making current conditions ideal for strategic acquisitions.
