Digital Dealer - January 2018 - 8

O WN E R S H I P

Continued from pg. 7

dealership is never going
to be worth more than it
is today." - Dale Pollak,
Founder of vAuto and
SG&A	as	%	of	GP
SG&A	as	%	of	GP
2010 2010 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015
Executive Vice President
PublicsPublics 78.5% 78.5%75.6% 75.6%74.0% 74.0%73.2% 73.2%72.4% 72.4%
72.7%
72.7%
at Cox
Automotive.
AutoAverage	Private	Dealership
Average	Private	Dealership
82.7% 82.7%82.4% 82.4%83.4% 83.4%84.4% 84.4%85.1% 85.1%
85.6%
85.6%
motive News, November
6, 2017
Publics versus Average 74.7% 74.7%
More so than in the
Private Dealer
past, our clients increasingly cite the risk factors
2017 YTD
associated with changes
in auto retail as a major
87.8%
87.8%
driver of the decision
to sell. While we have
74.3%
74.3%
all heard about industry
disruption from many
sources outside of auto
retail, including technologists and start-ups, we are
now participating in active
discussions inside our
industry about these very
same issues.
Increasingly, dealers
believe the industry will
Average
Average
Private
Private
Dealership
Dealership
Publics
Publics
consolidate out of necessity, as only the largest,
Source: NADA, Kerrigan Advisors Analysis, and SEC Filings
best-capitalized players
CHART 2

Average Dealership SG&A
Expenses as a Percentage
of Gross Profit

CHART 3

will have the balance
sheet to navigate auto
retail's evolution. And,
the benefits of consolidation are quite evident
in some cost lines. The
average private dealership's sales, general and
administrative expenses
(SG&A) consume 87.8%
of gross profit, which is
13.5% higher than the
average public (See Chart
2) . Economies of scale
and scope will become
even more important in a
sales plateau where profit
growth depends on operational efficiencies.
In this environment,
going at it alone looks
increasingly risky and less
appealing to some dealers, prompting more to
sell. We expect this trend
to continue until we have
greater clarity regarding
auto retail's future and the
Continued on pg. 10

CHART 4
2017	YTD

Average	Dealership	Earnings
##########
Estimated Average
Estimated
Average
Dealership
2017	YTD
Average	Blue	Sky	Value
##########
4.5x
Average	Rent
$739,756 Value
Dealership
Real Estate
Blue Sky Value as a Multiple
Average	Real	Estate	Value
$10,567,943
14.3x
as a Multiple of Average
of Average Dealership
Dealership Rent
Earnings (Pre-Tax)

2017 LTM

2017 LTM
$6,348,074

$10,567,943

$1,410,683

$739,756
Average Rent

Average Real Estate Value

Source: NADA and Kerrigan Advisors Analysis. Note: Average real estate
value is based on a 7% cap rate of average dealership rent.

8

JANUARY 2018

D I G I TA L D E A L E R . C O M

Average Dealership Earnings
Source: NADA and Kerrigan Advisors Analysis

Average Blue Sky Value

GPI GPI
PAG PAG
LAD LAD

AN
ABG
SAH
GPI
PAG
LAD

AN
ABG
SAH
GPI
PAG
LAD


http://www.DIGITALDEALER.COM

Table of Contents for the Digital Edition of Digital Dealer - January 2018

Digital Dealer - January 2018
Contents
The Art of Handling Mistakes
Motion and Commotion – The Buy/Sell Market Intensifies
You Don’t Have to Be Blood to Be Family in the Dealership
Shifting From Crisis to Opportunity
Warning! Your Customers Know More Than Your Salespeople. But Not for Long.
Advertising Your Tech-Spertise!
From the Show Director
Drawing the Curtain Back
Digital Dealer Workshops Chicago
Cover story
Interview with the 2018 Chairman of the Chicago Auto Show
Ready… Fire!...Then Aim
Turning Cash Buyers into Auto
Need a Tech – Keep a Tech or Other Staffer?
The New Car Buyers’ Clinic: A Case Study in How to Royally Mess It up!
The Pros and Cons of Building a Dealership Facebook Page
Is Your Dealership's Advertising Stuck in the '60s?
4 Ways to Sell More Cars in 2018
Digital Dealer - January 2018 - CT1
Digital Dealer - January 2018 - CT2
Digital Dealer - January 2018 - Digital Dealer - January 2018
Digital Dealer - January 2018 - Cover2
Digital Dealer - January 2018 - 1
Digital Dealer - January 2018 - Contents
Digital Dealer - January 2018 - 3
Digital Dealer - January 2018 - The Art of Handling Mistakes
Digital Dealer - January 2018 - 5
Digital Dealer - January 2018 - 6
Digital Dealer - January 2018 - Motion and Commotion – The Buy/Sell Market Intensifies
Digital Dealer - January 2018 - 8
Digital Dealer - January 2018 - 9
Digital Dealer - January 2018 - 10
Digital Dealer - January 2018 - 11
Digital Dealer - January 2018 - You Don’t Have to Be Blood to Be Family in the Dealership
Digital Dealer - January 2018 - 13
Digital Dealer - January 2018 - 14
Digital Dealer - January 2018 - Shifting From Crisis to Opportunity
Digital Dealer - January 2018 - 16
Digital Dealer - January 2018 - 17
Digital Dealer - January 2018 - Warning! Your Customers Know More Than Your Salespeople. But Not for Long.
Digital Dealer - January 2018 - 19
Digital Dealer - January 2018 - Advertising Your Tech-Spertise!
Digital Dealer - January 2018 - 21
Digital Dealer - January 2018 - From the Show Director
Digital Dealer - January 2018 - 23
Digital Dealer - January 2018 - 24
Digital Dealer - January 2018 - Drawing the Curtain Back
Digital Dealer - January 2018 - 26
Digital Dealer - January 2018 - Digital Dealer Workshops Chicago
Digital Dealer - January 2018 - Interview with the 2018 Chairman of the Chicago Auto Show
Digital Dealer - January 2018 - 29
Digital Dealer - January 2018 - 30
Digital Dealer - January 2018 - 31
Digital Dealer - January 2018 - 32
Digital Dealer - January 2018 - 33
Digital Dealer - January 2018 - Ready… Fire!...Then Aim
Digital Dealer - January 2018 - 35
Digital Dealer - January 2018 - Turning Cash Buyers into Auto
Digital Dealer - January 2018 - 37
Digital Dealer - January 2018 - Need a Tech – Keep a Tech or Other Staffer?
Digital Dealer - January 2018 - 39
Digital Dealer - January 2018 - 40
Digital Dealer - January 2018 - The New Car Buyers’ Clinic: A Case Study in How to Royally Mess It up!
Digital Dealer - January 2018 - 42
Digital Dealer - January 2018 - The Pros and Cons of Building a Dealership Facebook Page
Digital Dealer - January 2018 - 44
Digital Dealer - January 2018 - Is Your Dealership's Advertising Stuck in the '60s?
Digital Dealer - January 2018 - 46
Digital Dealer - January 2018 - 47
Digital Dealer - January 2018 - 4 Ways to Sell More Cars in 2018
Digital Dealer - January 2018 - Cover3
Digital Dealer - January 2018 - Cover4
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