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Trends in the Australian retail auto industry and their impacts on dealership values
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Trends in the Australian retail auto industry and their impacts on dealership values

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:

  • Auto dealer groups are still enjoying extraordinary earnings, however, the growth in profits have likely levelled off in Q2/Q3 2022.
  • Average estimated goodwill values for dealerships have doubled since Q4 2019, with the multiples of net profit before tax (NPBT) remaining constant. The uplift in goodwill values attributed to increased profitability.
  • Pent up demand for new cars is driving 2022 volumes with tight supply, which will underpin dealer profits for some time – at least another 12 months – despite the significant economic headwinds that are emerging.
New Car Sales in Australia

Source: VFacts & *Annualised figures
  • Consolidation continues to be a dominant trend in retail automotive and will be for some time as the industry is still very fragmented

 

Dealer groups by number of rooftops Number of owners in range Percentage of Owners Total rooftops by range Percentage of rooftops
50+ 5 0.8% 608 18.0%
26-50 6 0.9% 222 6.6%
11-25 49 7.4% 714 21.1%
6-10 102 15.4% 753 22.3%
1-5 501 75.5% 1084 32.1%
Totals 663 100.0% 3381 100%
Source: Pitcher Partners dealer listing

The following delves deeper into some of the emerging trends across the sector:

Economic and new vehicle supply trends (a bit of history)

Mergers and Acquisitions (M&A) Trends

Current and Future Maintainable Earnings and Deal Structure trends

Current market conditions impacting the Australian retail motor industry

Supply chain issues

Supply and demand

The dealership

 

The following articles provide insights in the future of the industry:

Agency sales model

Electric vehicles

This article was first published by Go Auto News on 27 September 2022. Licensed by the Copyright Agency. You must not copy this work without permission.
This content is general commentary only and does not constitute advice. Before making any decision or taking any action in relation to the content, you should consult your professional advisor. To the maximum extent permitted by law, neither Pitcher Partners or its affiliated entities, nor any of our employees will be liable for any loss, damage, liability or claim whatsoever suffered or incurred arising directly or indirectly out of the use or reliance on the material contained in this content. Pitcher Partners is an association of independent firms. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. Liability limited by a scheme approved under professional standards legislation.

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