Expert Insights: Key considerations for dealers thinking about selling their dealership


It is no secret the Canadian auto dealership market has seen significant consolidation over the past few years. It is a trend Heasty expects to continue as an increasing number of dealers reach retirement age, run up against new challenges, and consider cashing out.

Many dealers who are 55 or older are beginning to reach this point, Heasty said. Especially from those at the smaller or middle end of the market he has begun to hear a common reflection. “They’ll say: ‘You know what, this has been a great run. There’s tons of money out there, the market’s still buoyant, I’m going to take a cheque now.’”

Age is one factor, but the business has changed too, Heasty said. More sophisticated marketing tools that the older generation is not always as well equipped to handle are just one example. The encroachment of the agency model and advent of electric vehicles are two others.

Dealership valuations are another driving force.

“If you’re a dealer thinking of selling, now’s the time because those gross profits per unit will start coming down again as there’s supply in the market,” Heasty said. “I think dealers will continue to maintain profitability, but it won’t be as easy as it was through the pandemic.”

So far, Heasty added, goodwill values in dealership transactions have remained high. Significant hikes in interest rates could start to bring valuations down, he said, but with dealers getting a handle on expense control as they worked through COVID-19 closures, he sees much higher interest rates as one of the contributing factors that could harm goodwill values.

“There has been a permanent shift in overhead,” Heasty said, noting dealers can do the same amount of business they were doing before the pandemic, but with fewer workers and less advertising. The realigned expense structure simply means net profits have gone up, making dealerships more valuable.

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