Q1 2021 AUTOMOTIVE DEALERSHIP BUY-SELL SUMMARY FOR TIM LAMB GROUP

THE ROBUST BUY-SELL CONTINUES

The continued consolidation from larger groups coupled with limited supply of quality listings led to 25 completed & closed franchised dealership sales in Q1 including the sale of Mike Raisor’s seven stores in Lafayette, Indiana to Five Star Auto Group. This elevated market activity resulted in a 167% year-over-year increase in the first quarter for Tim Lamb Group.
 

RETAIL SALES INCREASE WHILE FLEET PRODUCTION IS CRIPPLED
 
With the continued vaccination roll-out in the US & Canada, and consumers' readiness to get out and about, Q1 saw an increase in retail automotive sales of +11% and +15% in each respective market. The industry achieved this growth despite a significant reduction in fleet production & sales (>30% YoY) due to supply constraints. The worldwide semi-conductor shortages and supply chain issues have forced manufacturers to focus production on high velocity/margin vehicles. This focus on core production and fleet reduction has produced three outcomes. 

• Dealers are continuing to see increased margins retailing high-demand model

• The limited supply in off-rental vehicles due to the fleet production constraints has maintained elevated trade-in values and, consequently, higher used vehicle prices

• Stocking the shelves with limited core and high-velocity new vehicles has assisted in reducing dealer's overall carrying costs.
   

 
SURGE IN FIRST TIME DEALERSHIP BUYERS SPURS DIVESTMENT

With dealers continuing to see strong balance sheets, cash flow and extended credit from their lenders, we continue to see an in-flow of highly qualified new buyers entering into the retail automotive market sourcing acquisitions. Conversely, because of the current business climate, fewer dealers are looking to divest. This increase in quality buyers along with the decrease in dealers looking to sell has created optimum pricing for those dealers that have put their stores on the market.

 
 
PROMISING SELLER’S MARKET THROUGH Q3 2021

Our outlook in Q2/Q3 is that the market continues to have a shortage of inventory for franchised dealerships. Should the lack of inventory persist, we expect the blue-sky values to continue to be elevated and a continued sellers' market through the first half of 2021. Given the decrease in Tier one franchises & locations, large dealer groups have amended their ideal targets, becoming more flexible on brands & locations. As an aggregate, EBITDA adjusted base-line multiples continue to float at, or above, high valuations maintaining the theme of a "Seller's Market" into Q2/Q3. We anticipate that qualified buyers will continue to expedite offers on sought-after franchises & locations at the high-multiple range to satiate their sourcing of a return on stagnant cash flow.

The key drivers for all buyers continue to be brand and then location. The most requested brands continue to be domestic, tier-one import brands and Luxury. Metro and near metro locations are in significant demand across both markets.
 
 
IN CONCLUSION

The continued surge of interest to acquire, a dramatic reduction in selling dealers pushed by the low interest & significant year-over-year increased profitability has further perpetuated the shortage in supply and elevated blue-sky values.
 
Tim Lamb Group is the Largest Automotive Buy-Sell broker in North America, and since 2006, we have assisted in over 1000 transactions totaling more than $10 billion