Kerrigan Advisors Represents RRR Automotive Group in Sale to Group 1 Automotive

Rhea-AI Summary

Kerrigan Advisors facilitated the sale of RRR Automotive Group's five new car dealerships to Group 1 Automotive, expanding the latter's presence in the Washington-Baltimore region. This marks Kerrigan Advisors' 50th franchise sale in the Mid-Atlantic since 2020, solidifying its position as a leading dealership sell-side advisor. The transaction underscores the strong demand for top import franchises in economically vibrant markets, showcasing the continued attractiveness of auto dealerships as retail investments despite industry challenges. The deal reflects the growing trend of consolidators reinvesting profits into acquisitions, particularly in thriving economies like the Baltimore-Washington metro area.

Insights

Market Research Analyst

The acquisition of RRR Automotive Group's dealerships by Group 1 Automotive represents a strategic expansion in the Washington-Baltimore metropolitan region, a key area with a high concentration of import brand vehicles. The transaction is significant not only because it involves the top Honda dealerships in Maryland but also because it reflects the current consolidation trends within the auto retail industry. Consolidation allows larger entities like Group 1 to leverage economies of scale, optimize operational efficiency and enhance market penetration, especially in regions with favorable economic indicators such as high GDP growth rates and median household incomes.

Moreover, the deal highlights the resilience of the dealership buy/sell market despite macroeconomic headwinds like rising interest rates, which could potentially dampen retail investments. The continued investment by consolidators suggests a bullish outlook on the profitability and ROI of auto dealerships, particularly in economically robust areas. This transaction may serve as a bellwether for future M&A activity in the sector, indicating sustained interest and confidence among large automotive groups in pursuing strategic acquisitions.

Financial Analyst

Group 1 Automotive's acquisition of RRR Automotive Group's franchises is a financial maneuver that could have a positive impact on Group 1's revenue streams and market share. By acquiring the #1 and #2 volume Honda dealerships in Maryland, Group 1 is likely to see an immediate increase in sales volume and market presence. The deal also underscores the valuation premium for high-performing dealerships in strong economic regions.

From a financial perspective, the transaction may be accretive to earnings, given the synergies expected from integrating the new dealerships into Group 1's existing operations. Investors should monitor the post-acquisition integration process for efficiencies and potential cost savings, which could further enhance profitability. The long-term success of this acquisition will depend on Group 1's ability to maintain the high performance of the acquired dealerships and capitalize on the economic growth of the Washington-Baltimore region.

Automotive Industry Expert

The transaction between RRR Automotive Group and Group 1 Automotive underscores the strategic importance of non-luxury import brands in the automotive market, particularly in import-dominant regions. The Washington-Baltimore metropolitan area, with its high import market share, presents a lucrative opportunity for Group 1 to strengthen its position in the non-luxury segment. The success of RRR Automotive Group in capturing a significant portion of the local market share speaks to the effectiveness of its operational principles and customer service, which Group 1 will need to uphold to retain customer loyalty and sustain sales momentum.

The mention of a stand-alone Toyota certified center as part of the acquisition also indicates a focus on certified pre-owned (CPO) programs, which have become increasingly important revenue and profit sources for dealerships. Group 1's ability to integrate and manage the CPO operations effectively will be critical in maximizing the value of the acquisition and competing effectively in the pre-owned vehicle market.

Transaction expands Group 1’s presence in the Washington-Baltimore metropolitan region; represents Kerrigan Advisors’ 50^th franchise sold in the Mid-Atlantic since 2020, making the firm the undisputed leader in dealership sell-side advisory in the region

COLLEGE PARK, Md.--(BUSINESS WIRE)-- Kerrigan Advisors, the premier sell-side advisor and thought partner to auto dealers nationwide, represented College Park, Maryland-based RRR Automotive Group in the sale of its five new car dealerships, including the #1 and #2 volume Honda dealerships in the state of Maryland, to Houston, Texas-based Group 1 Automotive (NYSE: GPI). This transaction underscores Kerrigan Advisors’ industry-leading track record selling the most valuable auto retailers nationwide and marks the 50^th franchise sale in the region completed by the firm since 2020. With this transaction, Kerrigan Advisors has represented on the sale of over seven billion dollars on behalf of their dealership clients in just the last nine years, making the firm the leader in auto retail sell-side advisory nationwide.

RRR Automotive Group, founded by Dick Patterson and Robert Hisaoka in the 1990s, is one of the most valuable import groups in the Mid-Atlantic. The group includes Toyota of Bowie, Kia of Bowie, Honda of Owings Mills, Honda of Greenbelt, College Park Hyundai and Toyota Certified at Capital Plaza (one of the nation’s few stand-alone Toyota certified centers). RRR Automotive Group has served its community for over 27 years through its guiding principles - Reliable, Responsible and Respectful.

“Kerrigan Advisors’ expertise selling the most valuable dealership groups and their impeccable track record of success, particularly in the Mid-Atlantic region, made them the perfect partner for this transaction. We could not have asked for a better advisor to ensure we identified the right buyer for our group and that the transaction ran smoothly from start to finish,” said Dick Patterson, CEO of RRR Automotive Group. “Gabe Robleto and the entire Kerrigan Advisors team were in lock step with us at each stage of the process, and we couldn’t have been more satisfied with the final result.”

“It was a true pleasure working with RRR Automotive Group whose premier import brands and location in one of the nation’s top economies were leading drivers of the strong buyer demand for the group,” said Gabe Robleto, senior vice president, sell-side advisory at Kerrigan Advisors. “We are proud to have shepherded this important transaction to such a successful conclusion and appreciate the trust Dick Patterson and Robert Hisaoka placed in Kerrigan Advisors. I also want to congratulate Group 1 Automotive on adding these exceptional franchises to their network.”

The transaction expands Group 1’s presence in the region and in the non-luxury import brand market. The Washington metropolitan region is an import-dominant market with market share at 72% – 24% higher than the US average, and RRR Automotive Group dominates the markets in which it operates, capturing 48% of Bowie, College Park, Greenbelt and Owings Mills’ import non-luxury sales since 2019. Additionally, the area is one of the nation’s most economically vibrant and fastest growing with a population of 10 million. The region’s GDP has grown at a 4% CAGR since 2001, far outpacing the US, and boasts high median household incomes, high educational attainment rates and superior quality of life rankings.

“This transaction highlights the continued strength of the buy/sell market for top import franchises in economically vibrant markets. Despite an elevated interest rate environment and cooling industry profits, dealerships remain one of the most lucrative retail investments in the country,” said Erin Kerrigan, founder and managing director of Kerrigan Advisors. “Leading consolidators continue to reinvest their tremendous profits into acquisitions, attracted to the high return on investment achievable with auto dealerships, particularly import franchises in growing economies like the Baltimore-Washington metro. We expect this sizable transaction is an indicator of another active buy/sell market in 2024.”

Steven H. Schram of Shapiro, Lifschitz & Schram served as legal counsel to RRR Automotive Group. Brian Nolen of Nolen, PLLC served as legal counsel to Group 1 Automotive.

About Kerrigan Advisors

Kerrigan Advisors is the leading sell-side advisor and thought partner to auto dealers nationwide. Since its founding in 2014, the firm has led the industry with the sale of over 230 dealerships generating more than $7 billion in client proceeds, including the third largest transaction in auto retail history – the sale of Jim Koons Automotive Companies to Asbury Automotive Group. The firm advises the industry’s leading dealership groups, enhancing value through the lifecycle of growing, operating and, when the time is right, selling their businesses. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, Kerrigan Advisors does not take listings, rather they develop a customized sales approach for each client to achieve their personal and financial goals. In addition to the firm’s sell-side advisory services, Kerrigan Advisors also provides a suite of consulting and investor services including acquisition and expansion strategies, valuation assessments and benchmarking, open point proposals and real estate advisory.

Kerrigan Advisors monitors conditions in the buy/sell market and publishes an in-depth analysis each quarter in The Blue Sky Report®, which includes Kerrigan Advisors’ signature blue sky charts, multiples, and analysis for each franchise in the luxury and non-luxury segments. To download a preview of the report, click here. The firm also releases monthly The Kerrigan Index™ composed of the seven publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail. To access The Kerrigan Index™, click here. To read the 2023 Kerrigan Dealer Survey, click here. To read the 2023 Kerrigan OEM Survey, click here. Kerrigan Advisors also is the co-author of NADA’s Guide to Buying and Selling a Dealership.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240213995318/en/

Kerrigan Advisors Media Contact:

Melanie Webber (melanie@mwebbcom.com), mWEBB Communications, 949-307-1723

Source: Kerrigan Advisors

FAQ

Who facilitated the sale of RRR Automotive Group's dealerships to Group 1 Automotive?

Kerrigan Advisors facilitated the sale of RRR Automotive Group's dealerships to Group 1 Automotive.

How many franchise sales has Kerrigan Advisors completed in the Mid-Atlantic region since 2020?

Kerrigan Advisors has completed 50 franchise sales in the Mid-Atlantic region since 2020.

What does the transaction between RRR Automotive Group and Group 1 Automotive signify?

The transaction signifies Group 1 Automotive's expansion in the Washington-Baltimore region.

What is the market share of import brands in the Washington metropolitan region?

Import brands hold a 72% market share in the Washington metropolitan region.

Who served as legal counsel to RRR Automotive Group in this transaction?

Steven H. Schram of Shapiro, Lifschitz & Schram served as legal counsel to RRR Automotive Group.