Presidio’s latest quarterly publication highlights normalization above pre-pandemic norms

DENVER/ATLANTA — November 12, 2024 — The Presidio Group has launched its latest issue of “Presidio Perspectives: A Quarterly Outlook on Auto Retail and M&A Trends,” a publication that chronicles and captures the shifts in dealership performance, auto technology developments and the dealership M&A market.

The report, which provides a summary of the third quarter, focuses on two key principles moving to the forefront of the auto retail market: certainty and resiliency.

With the results of the 2024 election now clear, dealers who were sitting on the sidelines waiting for a sense of political direction tell us they are emboldened to move forward faster on dealership acquisitions. An easing of monetary policy and a loosening in broader financial conditions will potentially mean lower interest rates, which should support an environment of robust buy-sell activity.

At the same time there is a normalization of dealership earnings, which speaks to auto retailing’s resiliency.

Among other findings in the latest report:

  • In our overview of the dealership buy-sell space, we update readers on deal pace in 2024. Through September, Presidio estimated there were about 290 U.S. transactions involving 440 dealerships. Based on an analysis of historical patterns, Presidio is projecting that count to grow for the full year to about 380 transactions involving around 570 dealerships changing hands. 
  • The decline in net pretax profit for the average franchised store appears to be stabilizing — the falloff through nine months of 2024 was slightly better than the drop at midyear. 
  • Dealers have the opportunity to offset future margin declines, specifically through growing fixed operations and improving team member productivity. Service and parts may prove to be the business unit that stabilizes dealership earnings as vehicle prices and margin integrity for both new and used levels out. Our data indicates that fixed-operations gross profit increased 5.4% for the average dealership year over year for the first nine months of 2024 and represented 50.7% of total gross profit.

“The modest improvement seen during the just-completed third quarter is the strongest indicator yet that retail automotive’s profit tumble could end up stabilizing at a level well above pre-pandemic norms,” said George Karolis, president of The Presidio Group. “The improvement in fixed-ops performance was a clear bright spot.”

Also in this issue:

  • Presidio Director of Research Kevin Tynan compares the rationalization of the franchised dealer base with automakers’ progress on matching production capacity to demand and foresees a reckoning on the manufacturing side.
  • We chronicle the state of the economy in our data digest section and introduce a data library — a collection of standing charts covering key macroeconomic and industry data that we’ll update each quarter to serve as a quick reference resource for readers.
  • As part of our technology overview, we share highlights of our recent technology summit in Denver, which brought together auto tech entrepreneurs and investors for a one-day exploration of the trends in that segment.

To download and read the report and register for future publications, go to: https://thepresidiogroup.com/news-insights/#quarterly-report

About The Presidio Group LLC 

The Presidio Group was founded in 1998 with the simple mission to relentlessly put the interests of our clients first. By steadfastly adhering to this philosophy, the firm has earned the trust of clients throughout the United States. During their careers, the professionals at Presidio have collectively done more than 275 transactions for more than $18.5 billion. The Presidio Group, based in Denver and Atlanta, publishes Presidio Perspectives: A Quarterly Outlook on Auto Retail and M&A Trends, a leading source of information about the automotive retail landscape. Presidio Merchant Partners LLC is a subsidiary of The Presidio Group LLC and is a member of FINRA and SIPC. For more information on Presidio, visit www.thepresidiogroup.com.

Contacts

Brodie Cobb
(720) 844-3151 
bcobb@thepresidiogroup.com

George Karolis
(678) 831-5520
gkarolis@thepresidiogroup.com