You would think that General Motors numerous recalls would have businessmen and investors running for the hills, but instead, it seems to have piqued interest in the company. Automotive News reports that around 26 GM-brand dealerships have been sold in the first seven-months of 2014, significantly more than any other automaker.
Why are GM stores the most sold and acquired dealerships this year? According to Alan Haig, president of dealership buy-sell advisory firm Haig Partners, the trend is a sign of swelling profits and a shift in momentum for the brands.
“It shows, contrary to what you might think — that the recalls would have chilled buyers’ appetites toward GM — they seem to be proceeding faster into buying GM stores,” Haig told AN. “It’s a sign that their profits are strong, and buyers are seeing momentum in the GM brands that didn’t exist in prior years.”
Erin Kerrigan, managing director of dealership advisory firm Kerrigan Advisors, told AN that GM’s handling of the recall has also contributed to the increase in interest towards GM-brand dealers.
“The lesson is: The way they’ve handled the recall has resulted in minimal effect,” Kerrigan said. It “has impressed the buyer community so that they’re interested in continuing to buy General Motors’ franchises.”
Dealers say GM has been easy to work with during the recalls, all while their sales have remained on par with pre-recall levels. As of July, sales were up 3 percent year-over-year, however they had slipped by 1 percent by the end of August.
“We have not seen or been presented with any GM store in a distressed sale circumstance, and I don’t expect that circumstance to develop,” AutoNation CEO Mike Jackson said.
GM spokesman Ryndee Carney also confirmed that “GM dealerships continue to be in demand and their values are appreciating in line with the rest of the industry,” while average dealer profitability is “the strongest it has been in years.”