By Linda Barnette, MD Johnson, Inc.
After my Buy/Sell panel during the China Automobile Dealers Association annual conference in the south China city of Zhuhai last month, the owner of a Chinese dealership group approached me to follow up on a question he had asked during the panel presentations. His question involved, naturally, acquiring a dealership in the U.S.
There is a lot of interest in the retail automotive market here in the U.S., and not just from Chinese dealers eyeing the Buy/Sell market. One thing I learned visiting the China Automotive Dealers Association conference is that everyone is watching the U.S. market.
I was part of an international group hosted by CADA which also included my co-panelist Miguel Yelos San Martin, founder of YSM Design, and the heads of the dealer associations from around the world, including British Columbia, Canada; Italy; Germany; Russia; France; and Australia.
All the countries represented have similarities. Each monitor many of the same statistics as we do. That includes buying trends, customer satisfaction, image compliance, and overall sales. But, as I listened to each presenter I realized they also all monitor the North American market. China may have overtaken the U.S. as the world’s largest light vehicle market, but the U.S. is still a very important market to the rest of the world.
Each country’s presenter made a comparison to the U.S. in all facets except one — Buy/Sell trends. We at MD Johnson, Inc. were the only Buy/Sell advisors at the conference, which was attended by 17 countries and over 3000 dealer principals and leading automotive executives from China.
Our panel on the U.S. Buy/Sell market was the first time the topic has been addressed at the CADA annual meeting, but it won’t be the last. Investors in China want to know more about the U.S. Buy/Sell market.
China is now the world’s largest light vehicle market, with sales expected to hit 23 million units this year. As for brands, all the major global automakers have dealership networks in China, and there are more than a dozen domestic brands, as well.
Though light vehicle sales will rise by more than seven percent this year, they are expected to slow significantly in 2017. Meanwhile, China’s dealers already face cut-throat competition and razor-thin or non-existent margins. In this environment, Chinese dealership investors are looking outside of China for better opportunities.
That is why the room our panel took place in – one of the “International Day” events — was filled to capacity. We were asked many of the questions you might expect: “How much does a dealership cost?” and “How can I invest in the US dealership market?” We have many interesting prospects, and are figuring out the best way to potentially work together.
In exploring these relationships, we have found more similarities than differences. In the end, we are all in the people business. As shared on our panel, we value the same things in looking for business partners and building relationships. Overall China welcomed us with a great deal of respect and I will forever be grateful for CADA’s hospitality.
Linda Barnette is a principal at MD Johnson Inc., a dealership valuation and transaction advisory firm. Barnette can be reached at linda@mdjohnsoninc.com or 1-561-502-8407
