SVR Tracking’s Post

Post: Industry Fact: Navigating High Interest Rates in 2024 🚗📈 Fact: The automotive industry in 2024 is heavily influenced by high interest rates, which are impacting both new and used vehicle markets. High loan rates are expected to continue, affecting vehicle affordability and sales dynamics. Why It Matters: Vehicle Affordability: High interest rates make it more challenging for consumers to finance vehicle purchases, leading to a shift towards a buyer’s market. Sales Trends: New-vehicle inventory and sales are improving, but affordability remains a concern, driving consumers to seek more cost-effective options. Market Normalcy: After years of volatility, the market is beginning to stabilize, but the high interest rates pose ongoing challenges. How VFIM Can Help: Flexible Financing Solutions: VFIM offers digital tools that help dealerships navigate the complexities of high-interest environments by providing efficient and streamlined F&I processes. Customer Engagement: Engage customers with flexible financing options and reduce the time spent on in-store paperwork, enhancing their overall buying experience. Profitability: Maintain profitability by leveraging VFIM’s digital solutions to handle leads and manage financing more effectively. Stay ahead of the curve and adapt to the current market conditions with VFIM’s innovative solutions. 🌐 Visit www.virtualfimanager.com to learn more and schedule a demo today! 🔄 Share if you’re ready to navigate the 2024 automotive market with confidence! #AutoIndustry #HighInterestRates #VehicleAffordability #VFIM #DigitalFandI #CustomerExperience

Shifting economic conditions are changing the auto retail landscape. I have the latest insights on how dealers can turn uncertainty into opportunity. bit.ly/3WfRqB1

What’s the general mood of dealers as the industry enters the final quarter of the year? Cautious optimism. The Presidio Group’s fourth issue of “Presidio Perspectives: A Quarterly Outlook on Auto Retail and M&A Trends,” offers a glimpse into dealer sentiment on a range of topics. While the Midyear 2024 Dealer Direction Survey recognizes the reality of today’s falling dealership profits and valuations, it also reveals the fact that more than half of dealers surveyed expect dealership values to decrease over the next 12 months. Presidio’s report also offers a robust look at the profitability and performance of public dealership groups; M&A trends including transaction pace and outlook; auto retail technology trends; and an examination of disruptive forces at play in the industry. To read the report and register for future publications, go to: https://lnkd.in/eDSdaVna

It's not just in Oil & Gas. Consolidation will continue.

Here’s a mind-blowing statistic: 151 dealerships sold in Q1 — the most out of any quarter in the history of auto retail. What’s behind all this demand? It’s not that stores are cheap (in fact dealership valuations are still near all-time highs). And it’s not due to big public groups consolidating the entire market. The primary culprit(s) behind all this activity… are the private dealer groups. Private dealer groups accounted for *87%* of all deals in Q1 — they’re eager for growth and willing to pay big bucks to get it. If things keep going this way, this could be the biggest year for dealership consolidation. Read the latest Haig Report for more insights: https://lnkd.in/dNmbeFBZ (Data via CDG partner: Haig Partners #haigpartnerspartner)

We’ve never been busier with sale-leaseback assignments correlated to buy-sell activity. This surge is being driven by margin compression, consistently high blue-sky valuations and real estate values, and expensive debt from both traditional lenders and captives. Through a sale-leaseback process, dealers unlock real estate capital at up to 150% of its value. This capital is free from financial covenants and often comes at more attractive rates than available debt. When leveraged into the M&A capital stack, it creates immediate accretion. We're helping dealers across the country maintain their growth pace by maximizing their available capital. #NNNPro #Dealership #Capital #M&A #Growth

The recent Federal Reserve decision to cut its benchmark rate target by half a point may lead to increased demand for auto purchases, as consumers have been hesitant to buy due to high interest rates and prices. However, the impact of the rate cut may be delayed and electric vehicle buyers and younger consumers are among those most sensitive to interest rates. Key takeaways: - The half point rate cut by the Federal Reserve may nudge consumers back into showrooms for auto purchases. - Interest rates have been a major hindrance for auto dealerships, with 67% of dealers citing it as a challenge in a recent survey. - A Fed rate cut would likely cause 64% of consumers surveyed to change the timing of their next vehicle purchase. #NNNPro #Dealership #Capital

Publicly-traded dealership values have dropped significantly (~20%) from their peak in 2022. The catch? Values continue to be substantially above pre-pandemic levels, even though sales volumes and profitability have *decreased* for most brands. Alright, so what gives? In part, real estate and data. 1. Dealerships are typically sought after as an asset class for their reliable positive cash flow, while other forms of commercial real estate have been struggling. 2. The customer database that comes with a dealership holds significant value, and the tools to leverage this data have created enormous potential. Savvy mid-sized operators are acquiring dealerships and implementing better systems and technology to enhance profit margins across their businesses (class consolidated play). So what comes next… Values will likely continue slowly declining due to macroeconomic factors and a cooling car market, but the valuations we saw in 2019 are not coming back. (Data via @haigpartners)

Cox Automotive’s Auto Market Report video delivers a comprehensive analysis of the current automotive market. This video covers a wide range of topics, including consumer spending patterns, consumer sentiment, retail vehicle sales, financing rates, supply dynamics, pricing trends and leading indicators from Cox Automotive’s extensive data ecosystem.

According to Dave Cantin Group’s Market Outlook Report, dealer performance will be more important than ever in 2024. See what other trends your dealership needs to pay attention to: https://hubs.la/Q02lY-WQ0 #KeyTrak #OperationalEfficiency #KeyManagement