As touched on before, the supply of new vehicles to the Australian market is constricted. The constricted supply and recent surges in demand have pushed prices and gross margins to the highest on record, not only in new vehicles but also in the used car market. Speaking with our dealer clients, stock is limited, new orders face large wait times and average days inventory is down significantly from pre-pandemic levels.

Semiconductors Car manufacturers have suffered from a shortage of semiconductors since 2018 due to trade wars and then raw material shortages that were exacerbated by three separate factory fires, the Pandemic and other natural disasters. The auto manufacturers made the situation worse when facing dramatic declines in sales at the onset of the pandemic they […]

The key macroeconomic conditions that will provide headwinds for dealers in the next 12 months have been identified.

As the automotive industry continues to evolve and change and there are a number of trends emerging which impact dealership values, some of our key observations are as follows:

In the past two and a half years (since Q4 2019), we have experienced the following:

Thanks to current high and estimated future profits, there are many dealer groups and investors looking to acquire dealerships. Automotive dealerships have proven to be excellent investments in both good and bad economic times.

Dealerships in Australia are typically valued at goodwill plus net tangible assets to arrive at their enterprise value. The goodwill component is usually calculated as a multiple of earnings, or NPBT.

We are delighted to have released the first iteration of the Australian Listed Dealer Comparison and it reveals that it is a very interesting time to be a part of the motor industry.