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MotorVise Automotive handles record number of car dealership sales as trend towards consolidation continues

Fraser Brown, managing director of MotorVise Automotive

MotorVise Automotive has highlighted the growing trend towards consolidation within the industry after handling a record number of dealership sales since the start of the pandemic.

Its specialist brokerage service, which is bound by strict confidentiality rules, has experienced a three-fold increase in transactions over the past 24 months.

Managing director Fraser Brown said: “I envisage many more dealerships will come to market over the next 18 months as the industry continues to negotiate a period of uncertainty. The challenges of the pandemic prompted some business owners to conclude that it was the right time to exit, while others wished to get their money out to invest in other ventures.

“We experienced a record three-fold increase in dealership sales since early 2020 as owners have reassessed the future and direction of their business.”

The majority coming to market are single site or small group dealerships, which are largely being bought by their larger rivals who are in a stronger position due to higher profitability levels, greater economies of scale and improved funding access.

However, while dealership owners may drive a hard bargain on the forecourt, many are not always as savvy when it comes to securing a good deal for themselves.

Fraser said: “Unfortunately, people who have built up a business over many years can end up selling well below value. MotorVise recently worked with one dealership owner who was initially offered £200,000. In the end, we secured five times that sum.

“It may be that some owners simply want to dispose of their business quickly and accept the first offer, while others don’t always recognise its true value.”

Typically, dealership owners looking to sell are often introduced by a manufacturer to an interested buyer who will make an offer.

However, MotorVise Automotive follows a tried and trusted procedure and only negotiates with those in a position to acquire a business. It deals with one prospective buyer at a time and ends talks if the final offer fails to realise the valuation.

The North Yorkshire-based consultancy can work with businesses up to 24 months prior to sale to ensure it is an attractive prospect. Measures may include introducing new management systems or improving profitability.

Fraser added: “The last two years have been particularly difficult for many dealerships so it’s no surprise that has been reflected in a number of acquisitions, mergers, and site redevelopments.”