Dealer demand for franchises remains strong — but it is becoming increasingly selective.
Toyota ranked as the most desirable franchise among dealers in Presidio’s Midyear Dealer Direction Survey, and Presidio increased its estimated Toyota blue-sky multiple range to 8.0x–9.5x.
At the same time, valuation expectations for several other franchises have moved in the opposite direction including the removal of multiple guidance for Volkswagen, Volvo and Infiniti.
Scarcity is also becoming an increasingly important factor, particularly among premium luxury franchises. The Top 150 largest dealer groups own 27% of total dealerships, but more than half of premium luxury dealerships. That concentration of luxury ownership limits the supply of high-quality assets that come to market and placing an even greater premium on those that do.
Source: Presidio Proprietary Information
Why is the gap widening?
Buyers today are placing an even greater premium on brand strength, earnings durability, market position and long-term growth prospects.
That is creating a more bifurcated M&A market: significant competition for high-quality franchises, coupled with greater scrutiny of assets facing operational or brand-specific headwinds.
In today’s market, the brand logo on the dealership matters more than ever.