Toyota holds the largest market share in Los Angeles, followed by Honda. In the luxury segment, BMW leads, followed by Mercedes and Lexus. Each of these brands has a higher market share in Los Angeles than nationwide, indicating a strong market alignment. These stores will command strong values when they come to market, and only the most competitive bids will win these deals. With the market being this competitive, how do you bid to capture a deal? Competitive bids are usually a function of franchise multiples and the last 12 months of adjusted earnings or a net-to-sales proforma. California and LA Market When speaking with dealers and investors nationwide, concerns sometimes arise about investing in California due to the legislative environment, high taxes and high real estate values. While these factors impact return on investment, public and private buyers view these opportunities differently. A skilled advisor with consistent deal flow can navigate these complexities and execute transactions effectively. The market is characterized by higher real estate values and comparatively higher taxes. Still, we can partner with our associations to help drive favorable legislative changes. GLANCDA and CNCDA achieved an excellent win for the dealer body by passing AB 473. Several tenants to this bill protect the rights of the franchise network, including preventing manufacturers from introducing new vehicle brand names that would directly compete with their dealers, establishing cost sharing on customer-facing DC fast chargers, and placing limitations on post-sale subscriptions for features already in the vehicle. The Private Attorneys General Act (PAGA) is the next big issue. Modifying this act will increase the desirability of dealerships across the state. The Greater LA market remains a hotspot for the AI revolution, venture capital and new business starts while being home to a dense, affluent population that drives — a lot! We recently observed a sizeable public acquisition in our neighboring Orange County, and we have significant interest and success from family office and private equity investment in LA market auto retail. These sophisticated investors recognize the value and potential of this market. I recently interviewed Brian Maas, president of CNCDA, on our Haig Partners Podcast — Riding Shotgun. We discussed the value of operating in California and how the upside far outweighs the perceived challenges. The episode will be published soon, so stay tuned! The Greater LA Market is competitive and nuanced; it remains an exciting time to be a dealer. With the cost of new vehicles rising and interest rates staying “higher for longer,” having a robust economy in our backyard is a distinct advantage. To download the Haig Report, scan the QR code. https://share.hsforms.com/ 1fnbTWTXWSluBA5sfd77sjgnr2vn 25
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