Automotive IndustryBusiness OutlookBusiness Plans

What Is Driving The Increase In Dealership Mergers And Acquisitions in 2015?

Nissan Car Dealership

There are two surefire ways to make money. One is to anticipate trends and know when to buy low and when to sell high. The other is to have the fortune to invest. These types of investors are cornering the market, buying up independent automotive dealerships like the Nissan dealership in Winnipeg, and they are realizing great profits for it.

Nissan Car Dealership

What do billionaires like Warren Buffett do? They wait for an opportunity to arise and then use their wealth to maximize it. The foreclosure failure of the late 2009 and early 2010 market created a niche for Mr. Buffett in the real-estate business.

Seeing a host of failing real estate businesses, both publicly and privately owned, he began his quest to buy them up to form a huge conglomerate. Now just a few short years later, Berkshire Hathaway is turning a profit and Mr. Buffett is becoming richer.

The same opportunity he saw in the real estate business, he forecasted for the automotive dealership business. Seeing a rebound in the market, watching consumer confidence rising, and witnessing the accessibility to get loan money on the rise, he saw a recipe for huge profits. Swooping in, he, along with other big business Tycoons like George Soros, have created quite an expansive dealership industry for themselves.

A far cry from the 2007 situation when dealerships were barely able to keep their doors open, 2015 has seen a substantial increase in dealership capital. Estimates are that dealer property values have increased by 82% since 2006. Not bad for an automotive industry that was collecting a bailout from the United States government less than a decade ago.

Other factors driving the increase in mergers and acquisitions is that the dealership owners who were able to survive through the lean years are now looking toward retirement. Not many of the small, independent dealerships, have changed ownership since they began.

That is leaving many seventy-something owners looking to get out and move on to a less stressful lifestyle. Making things easier, selling your dealership is no longer fire-sale. Many that weathered the storm have a plethora of suitors vying to buy them out and are reaping the rewards.

Those who aren’t looking to retire, are looking to sell in lieu of having to upgrade. Consumers want a fancy showroom and a trendier look. Due to many dealerships being purchased to large corporations or conglomerates, who have the means to update, it seems the perfect time for small time owners to sell out. They are opting to let someone else revamp what is left of their dealership.

So, what is on the horizon for car dealerships? If interest rates remain low, and cash continues to be accessible, there is no reason to believe that the increase in sales is going to slow anytime soon. Many of those purchased shops are turning a profit within the first year; that will allow them to strive even if things start to get sparse again.

Those who saw potential where everyone else saw failure are finding their bet paying off big-time. Conglomerates are getting bigger and stronger. Shortly, we may see the disappearance of family run, hometown, local service, dealerships altogether.