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    Home ยป Group 1 CEO Kenningham views some automotive dealerships as overpriced
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    Group 1 CEO Kenningham views some automotive dealerships as overpriced

    Editor - The Auto JournalBy Editor - The Auto JournalMay 1, 2023Updated:May 1, 2023No Comments2 Mins Read
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    Group 1 Automotive Inc. is looking out some dealership sellers who it believes are pricing their companies unrealistically excessive.

    “There is a certain portion of sellers that have unrealistic expectations,” Group 1 Automotive CEO Daryl Kenningham mentioned in the course of the firm’s first-quarter earnings name final week. “I always like to tell people, we will never win a bidding war, but we try to stick to discipline with what we will pay for a group of stores.”

    Group 1, of Houston, is pursuing acquisitions as a giant a part of its progress technique. It’s additionally utilizing capital for share buybacks and funding in progress areas equivalent to service and expertise.

    Its newest acquisition of Estero Bay Chevrolet in Estero, Fla. within the first quarter is anticipated so as to add an estimated $150 million in annual income.

    More acquisitions are possible within the months forward, however Group 1 is avoiding transactions through which sellers are asking exorbitant costs, Kenningham mentioned. They’re not lifelike, he added, as a result of they do not think about future efficiency expectations.

    “They’re trying to price them based on what they did make last year, or even the year before, as opposed to what they will be making moving forward,” Kenningham mentioned.

    Gross revenue estimates in that state of affairs had been “once-in-a-lifetime” outcomes based mostly on provide chain points “and microchip shortages that we’ll probably never see again,” he added.

    But not all dealerships available on the market are overpriced, Kenningham mentioned.

    “Some sellers understand the market and where it’s heading,” he mentioned. “We always tell people we’re engaged with on our transaction [that] we try to make offers based on what we believe the stores will make, not what they did make. That’s always our guiding light on how much to offer for a dealership group.”

    Source: www.autonews.com

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