Texas dealers Rene Isip and John Eagle saw the way consumers wanted to buy vehicles increasingly shifting online — and that only intensified during the coronavirus pandemic. With it becoming tougher to compete with bigger public and private dealership groups, the partners crunched the numbers on what it would take for John Eagle Dealerships to build its own robust online sales technology systems and vehicle distribution network.
The verdict: It was simply too costly.
“You have to be either big or get bigger because they’re the ones that have the technology,” said Isip, former COO of the dealership group. “They have the distribution to be able to sell on the Internet.”
So John Eagle Dealerships in August sold 10 import-brand dealerships in two transactions to public retailer Lithia Motors Inc. and another luxury store to Park Place Dealerships. Isip, 61, now has one Honda store left in San Antonio, and Eagle, 66, has retired.
The John Eagle group is among an increasing number of retailers putting their stores on the market, dealership buy-sell experts say, and its deals helped fuel an acceleration in dealership transactions since June after acquisition activity slowed to a crawl in mid-March as the coronavirus outbreak took hold in the U.S.
Thirty-three dealerships changed hands in June, according to the second-quarter Haig Report, published by Haig Partners, a buy-sell firm in Fort Lauderdale, Fla. That followed just three stores selling in April and six in May, Haig Partners said. The slowdown pushed the acquisition count for individual dealerships for the first half of 2020 down 16 percent from 2019.
Kerrigan Advisors, an Irvine, Calif., sell-side firm, however, said in its second-quarter Blue Sky Report that the