Digital Dealer - May 2018 - 18

O WN E R S H I P

Continued from pg. 16

al increases in the federal
funds rate. Most expect
three or four increases
in the fed funds rate in
2018. These rises will
most significantly reduce
the profitability of dealers
who are accustomed
to maintaining large
amounts of inventory
and higher days supply,
further varying dealership
profitability.
"I'd remind you that a
1% move in interest rates
is $50 million pre-tax[expense] for us." - John
North, Chief Financial
Officer, Lithia Motors.
(2017 Fourth Quarter
Earnings Call)
As we anticipate
another very strong year
of transaction activity, we
see tax reform bolstering
the capital resources
of buyers, real shifts in
investment strategies,
and more variable performance across stores as
important themes that will
impact our industry in the
coming months.
RYAN KERRIGAN is Managing Director at Kerrigan
Advisors. Kerrigan Advisors
is a leading advisor to sellers
of higher value dealerships
and dealership groups
throughout the U.S. Ryan
works with private equity
clients advising them on their
auto retail investment strategy and works with sell-side
clients seeking private equity
exit. Ryan has extensive
experience in both private
equity and auto retail, having
run his family's dealership.
He started his career at
McKinsey & Company as
a management consultant,
advising Fortune 500 companies on growth strategies,
organizational issues, pricing
and business valuation.
EMAIL: ryan@kerriganadvisors.com.

18

M AY 2 0 1 8

CHART 4
2017
$1,395
$92
Average
Dealership
Profit Before
#DIV/0!
Tax vs. Operating Profit

$ in 1,000s, 2010-2017

$1,600

$1,400

$1,138

$1,200

$1,000

$800

$446

$874

$1,229
$437

$1,284

$1,382

$444

$436

$1,503

$1,467

$473

$329

$276

$600

$400

$200

$0

2010

2011

2012

Earnings
2013

Operating Profit
2014
2015

2016

Source: NADA

CHART 5

Average
Dealership
Floorplan
$1,395
$92
Interest per New Vehicle

2017

$40
$20

2010-2017

$15

$0
($20)
($40)

($46)

($60)
($80)

($52)

($56)
($77)

($100)
($120)

($94)
($113)

($140)
($160)

2009

2010

2011

2012

2013

2014

($124)
($147)
2015

2016

2017

For the average dealership, floorplan expense rose
62% between 2015 and 2017. Kerrigan Advisors expects
certain dealers to be more affected than others by increases
in interest rates, continuing the trend of more variable
and volatile dealership earnings.
Source: NADA

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


http://www.DIGITALDEALER.COM

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

Digital Dealer - May 2018
Contents
Letter from the Show Director
Stop Waiting, Start Changing
Technology Does Not Replace Your People!
Key Buy/Sell Trends for 2018
What’s Tomorrow?
Save Today…Gone Tomorrow
Three Pointers to Maximize Purchased Unit Profitability
Your Best Advertising Target!
NADA Recap BY ARNOLD TIJERIN
Digital Dealer 24 Conference & Expo Recap
Put a Ring on It
“Voicemail:” Untapped Opportunity
10 Questions to Ask When Hiring a Social Media Manager
Omni-what? Your Dealership and the Emergence of the Omnichannel Approach
Digital Dealer - May 2018 - CT1
Digital Dealer - May 2018 - CT2
Digital Dealer - May 2018 - Digital Dealer - May 2018
Digital Dealer - May 2018 - Cover2
Digital Dealer - May 2018 - 1
Digital Dealer - May 2018 - Contents
Digital Dealer - May 2018 - 3
Digital Dealer - May 2018 - Letter from the Show Director
Digital Dealer - May 2018 - 5
Digital Dealer - May 2018 - 6
Digital Dealer - May 2018 - 7
Digital Dealer - May 2018 - Stop Waiting, Start Changing
Digital Dealer - May 2018 - 9
Digital Dealer - May 2018 - Technology Does Not Replace Your People!
Digital Dealer - May 2018 - 11
Digital Dealer - May 2018 - 12
Digital Dealer - May 2018 - 13
Digital Dealer - May 2018 - Key Buy/Sell Trends for 2018
Digital Dealer - May 2018 - 15
Digital Dealer - May 2018 - 16
Digital Dealer - May 2018 - 17
Digital Dealer - May 2018 - 18
Digital Dealer - May 2018 - 19
Digital Dealer - May 2018 - What’s Tomorrow?
Digital Dealer - May 2018 - 21
Digital Dealer - May 2018 - Save Today…Gone Tomorrow
Digital Dealer - May 2018 - 23
Digital Dealer - May 2018 - Three Pointers to Maximize Purchased Unit Profitability
Digital Dealer - May 2018 - 25
Digital Dealer - May 2018 - Your Best Advertising Target!
Digital Dealer - May 2018 - 27
Digital Dealer - May 2018 - 28
Digital Dealer - May 2018 - 29
Digital Dealer - May 2018 - 30
Digital Dealer - May 2018 - 31
Digital Dealer - May 2018 - 32
Digital Dealer - May 2018 - 33
Digital Dealer - May 2018 - NADA Recap BY ARNOLD TIJERIN
Digital Dealer - May 2018 - 35
Digital Dealer - May 2018 - Digital Dealer 24 Conference & Expo Recap
Digital Dealer - May 2018 - 37
Digital Dealer - May 2018 - 38
Digital Dealer - May 2018 - 39
Digital Dealer - May 2018 - Put a Ring on It
Digital Dealer - May 2018 - 41
Digital Dealer - May 2018 - “Voicemail:” Untapped Opportunity
Digital Dealer - May 2018 - 43
Digital Dealer - May 2018 - 10 Questions to Ask When Hiring a Social Media Manager
Digital Dealer - May 2018 - 45
Digital Dealer - May 2018 - Omni-what? Your Dealership and the Emergence of the Omnichannel Approach
Digital Dealer - May 2018 - 47
Digital Dealer - May 2018 - 48
Digital Dealer - May 2018 - Cover3
Digital Dealer - May 2018 - Cover4
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