Some of the largest auto dealer chains in the country are betting in the most direct fashion that some of the changes in auto retail since the COVID-19 pandemic are here to stay.

That is, the big chains are buying up other dealerships at a record pace, according to the companies that negotiate the concession mergers and acquisitions.

Buyers generally expect high prices and low discounts to be the new order of things, driven by a relative scarcity of products, not just a temporary accident.

This scenario is not all bad news for consumers. Large dealer chains are also investing heavily in online retailing. It’s faster and more convenient for customers, and in the long run the cost savings for dealers reducing overheads, including in-person staff, can help offset some price increases.

Lower inventory also means consumers could order bespoke features and options, instead of choosing from what’s on the dealer’s lot. The trade-off would be to have to wait for delivery, instead of the instant gratification of leaving in a new car the same day.

The fact is, the record pace of concession buybacks shows that the large concession chains expect concession profitability to improve further. In a recent survey of dealers, 79% of dealers surveyed said they expected profits to increase over the next 12 months, said Erin kerrigan, co-founder of Kerrigan Advisors, Irvine, California.

Kerrigan recently predicted a record number of at least 350 nationwide dealer transactions in 2021, representing more than 600 franchises. In the third quarter, she said transactions in 2021 were up 21% from a year ago.

Just this month, Asbury Automotive Group, Duluth, Ga., Has completed the acquisition of the Larry H. Miller Dealership Group, Sandy Utah, for approximately $ 3.1 billion. The deal represents annual revenue of approximately $ 5.7 billion. Asbury is based in Duluth, Georgia.

Also in December, Sonic Automotive Inc., Charlotte, NC, reached a $ 700 million deal to purchase RFJ Auto Partners, Inc., Plano, TX, which represents approximately $ 3.2 billion in annualized revenue.

The main driver of the franchise buying rush is “the explosive profitability of our industry,” Kerrigan said during a webinar earlier this month hosted by the American Association of International Automobile Dealers. “Today, more and more dealers are making more money than they could have imagined in a single year. “

Analysts are predicting that the current and insanely low level of stocks and the record prices we are experiencing will not last forever.

Prices are doomed to come down from today’s peaks once automakers address the current shortage of computer chips and other issues in the automotive supply chain. The latest forecasts on this subject date from the end of 2022 or until 2023.

But as prices moderate, dealers also don’t expect a return to the usual situation in automotive retailing, where automakers build too many cars and trucks, and too many products hunt too few. clients.

Charlie Chesbrough, Senior Economist for Beetle Automotive, said in a separate webinar sponsored by the Import Dealers Association earlier this month that automakers are motivated to keep their inventory “lean” all the time, or to return to big discounts.

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