I am writing this from Shanghai, where I attended the press days at the Shanghai Auto Show. China’s passenger market growth has changed to decline, producing a more sober mood in the industry. The bright spot is New Energy Vehicle sales, which refers to sales of plug-in hybrid electric vehicles, battery electric vehicles, and hydrogen fuel cell vehicles. For all intents and purposes it means PHEVs and BEVs. They are mainstream in all the stands. The other mainstream theme is SUVs. China’s consumers have turned to SUVs even more aggressively than U.S. consumers.
Also a theme – EV startups. Mostly featuring pure electric SUVs. The big question behind all these startups, as with any startup, is whether or not they can find funding. General admission, even by some EV startup-up founders, is that up to 90 percent will fail. But China is nothing if not willing to take the risk. So for U.S. dealers eyeing any Chinese brand, look to its source of funding first and foremost.
On to this week’s issue! Private equity has been a player in the dealership M&A market for several years now. This week we have a look at Open Road Capital, a firm whose principals say they aim to find great dealers, give them access to capital, and get out of the way. If that sounds too good to be true, maybe it is. I reserve judgement. Read about ORC and draw you own conclusions.
Also this week our good friends at The Rawls Group have some excellent succession planning advice. When there are multiple children laying claim to a portion of a family business, don’t confuse equitable with equal allocation, cautions Rawls. Learn more here.
And of course, there is Transaction News.