Beltway Talk Podcast: Pandemic Performance Fuels Investor Interest in Dealerships
Erin Kerrigan, Managing Director of Kerrigan Advisors, the leading sell-side advisor to auto dealers in the U.S. joins BeltwayTalk to discuss the disruption year of 2020, its impact on the dealership buy-sell market, and the “once in a lifetime” valuations she sees for dealers today. Armed with her latest Blue Sky Report, Erin offers valuable insight for dealers wanting to learn more about acquisition trends and how their business is valued today. Listen and subscribe to future Beltway Talk podcasts here.
Some Public Retailers Say Chip Shortage Could Pinch Supply Into Q3
Publicly traded dealership groups are mixed on how much pressure they're feeling from the new-vehicle inventory squeeze borne from the microchip shortage. Some see vehicle shortfalls getting worse as spring goes on. But they aren't hitting the panic button. Not yet, anyway, reports Automotive News. Penske Automotive Group Inc. had a 40-day supply of new vehicles at the end of March, down about 20 percent from the end of December. CEO Roger Penske acknowledged last week that inventory "is not in great shape.” Many public retailer executives said supply problems were worse for domestic brand vehicles and that having diversified dealership networks had helped them weather the crisis so far. Read more here (Source: Automotive News).
Toyota's Ind. Investment Will Yield Big Crossovers Dealers Have Craved
A pair of new unibody, three-row, eight-seat people haulers that will be built at Toyota Motor North America's assembly plant in Princeton, Ind., likely arriving in 2023, will give Toyota and Lexus dealers big top-end crossovers that will fill a competitive gap, reports Automotive News. The automaker announced last week that it would invest $803 million into the factory and add 1,400 jobs there to build the yet-to-be-identified crossovers, which the company said will "join a diverse, electrified product portfolio." In late December, Toyota trademarked the name Grand Highlander in the U.S. The two vehicles are likely to have at least hybrid if not plug-in hybrid variants, given the automaker's past pronouncements. Lexus retailers have long sought a large, three-row crossover to compete with offerings from other luxury brands. Toyota dealers, meanwhile, have asked the brand to replace the Land Cruiser, which is ending its long run in the U.S. Read more here (Source: Automotive News).
VW Plans to Design Its Own Computer Chips
Autoblog reports that Volkswagen plans to design and develop its own high-powered chips for autonomous vehicles, along with the required software, Chief Executive Herbert Diess told a German newspaper. "To achieve optimal performance in light of the high demands that exist for cars, software and hardware have to come out of one hand," Diess told Handelsblatt. Volkswagen did not plan to build semiconductors but wanted to own patents if possible, Diess said, adding that the group's software unit Cariad would develop the expertise and expand. It would not, however, give VW an edge in terms of supply, which has been an ongoing issue for automakers in the face of skyrocketing demand from virtually every manufacturing sector that utilizes electronic components. Instead, the move is a response to Tesla, which can integrate custom designed chips, allowing the U.S. company to develop new features faster than its competitors. "Apple and Tesla have higher competence in terms of how semiconductors are defined," Diess said. Read more here (Source: Autoblog).
Demand is Outpacing Supply of New Vehicles – Why That's Bad for Shoppers, But Good for Investors
Factory shutdowns starting last spring due to the coronavirus pandemic and occurring now due to a global shortage of semiconductor chips have caused the number of new vehicles available in the U.S. to nosedive, according to CNBC. For consumers, the shortage has meant higher prices and spending weeks, if not months, searching or waiting for the vehicle they want. But for automakers and dealers, it has translated to wider, if not record, profits and even selling vehicles before they arrive at dealerships. “The sales pace is faster than the resupply, and we think that that will get tighter going forward,” said Michelle Krebs, executive analyst at Cox Automotive. “We expect these supplies to be tight throughout 2021.” The shortage as well as stronger-than-expected demand from consumers throughout the coronavirus pandemic are keeping sales strong despite the lower inventories. The days of supply of new vehicles on dealer lots across the U.S. is 47 and on its way toward the low-30s, according to Cox Automotive. Some pickups and SUVs are far lower, including single digits, according to the company. Read more here (Source: CNBC).
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Your Car is About to Be a Software Platform, Subscriptions and All [Bloomberg]
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