Inside Automotive with Jim Fitzpatrick, powered by CBT News

What's Your Dealership Worth? The AI Revolution in Automotive Valuations

• Jim Fitzpatrick • Season 1 • Episode 20

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Dave Cantin, Chairman and CEO of the Dave Cantin Group, shares his expert insights on the current state of automotive M&A and how dealerships are approaching acquisitions in today's market. The conversation reveals how consolidation has evolved from quantity to quality, with buyers becoming increasingly strategic about which dealerships to acquire based on brand performance, geography, and potential return on investment.

• M&A activity remains strong with focus shifting from quantity to quality
• Consolidation continues with large publics and privates being more strategic about acquisitions
• Southeast and Sunbelt remain hottest markets, but California and other regions seeing renewed interest
• Successful acquisitions require preparation, confidentiality, and speed of execution
• Valuations driven by operational excellence, strong brands, and geographic location
• AI and data analytics transforming how buyers evaluate potential acquisitions
• Jump IQ platform provides comprehensive dealership valuation and performance benchmarking
• Many dealers don't know their true enterprise value despite it being their most valuable asset
• Stellantis dealers reporting significant improvement and renewed profitability
• Outlook for 2025-2026 remains positive with continued strategic consolidation

Reach out to the Dave Cantin Group to learn more about understanding your dealership's true value and creating a roadmap to enhance that value with their proprietary AI technology.


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Announcer:

You're watching Inside Automotive with Jim Fitzpatrick.

Jim Fitzpatrick:

Hey everyone, Jim Fitzpatrick, welcome back to another edition of Inside Automotive right here at the CBT Automotive Network. I've got Mr. Dave Cantin, chairman and CEO of the Dave Cantin Group, with me this morning to talk a little bit about the M&A activity that we see out there. Dave, thank you so much for taking the time out of what seems to be an extremely busy schedule for you these days, so I appreciate it.

Dave Cantin:

Jim, it's always a pleasure to be on. Good morning to you and thank you so much for having us on today.

Jim Fitzpatrick:

Sure, sure. So give us the high points here. What's the current state of the automotive M&A market from your perspective?

Dave Cantin:

You know that's a great question. Everyone kind of, I think, still has a little bit of that uncertainty of what's going to happen over the next few years, but we're not seeing a slowdown at all. It's really not about quantity anymore, it's really about quality. I think consolidation is evolving and dealers are just being more strategic today than ever before. They're really looking to find the best fit for their portfolio, for their automotive portfolio, and they're really being more strategic and acting smarter today than ever before.

Jim Fitzpatrick:

Sure, sure. How has consolidation changed over the past year?

Dave Cantin:

Yeah, it's evolved, right? I think consolidation is definitely on an uptick. It's growing each year, as we continue to see with the numbers. And look, the large publics and privates are out there every day looking for the best strategic acquisition that fits their portfolio. They're being much smarter, as I just said before. It's not about who's buying the most acquisitions. Everyone's fighting to buy the best acquisition right. What fits their portfolio the best? What brands are they performing at the highest level with, and where could they get the best bang for their buck? And then again, it's geographic location. Everyone's fighting over the same locations that want to grow and we continue to see consolidation at an all-time height.

Jim Fitzpatrick:

Yeah, Now you guys have been on fire here in the last year. Can you highlight a recent DCG transaction that illustrates these trends?

Dave Cantin:

Yeah, look, I think there's a few of them. I mean we continue to see Lithia on that strategic growth pattern. Brian DeBoer and team is incredibly intrigued to achieve their goals and you know I give them so much credit because, again to my point, it's not about growing with quantity of acquisitions. They are incredibly strategic on every acquisition they make. A recent Florida acquisition for them that we just closed not too long ago was West Palm Beach Hyundai, west Palm Beach Genesis, West Palm Beach Acura- an incredible platform for Lithia to add into their already incredible portfolio. Number one in the world and again it was a strategic play. It was really understanding where could they tuck in some great opportunity to a market that they already dominated?

Jim Fitzpatrick:

Right, right. And what dealer is not looking currently for a store in Florida, right, especially South Florida?

Dave Cantin:

Look, I mean, I'll tell you, the Southeast and Sunbelt is always a high priority for dealers to go after. It's just you know you really have to be prepared to execute quickly.

Dave Cantin:

You know, if an acquisition comes available in Florida. If it does, when it does, it's not something that you're sit on, look. You know it's not going to allow you a certain time to really evaluate that acquisition. You have to be prepared. Speed to the acquisition is the key and I'll tell you a lot of our clients that we're, that we work with, it's not calling them the day an acquisition comes to market. Where DCG really prides ourselves is working with our clients when we're not in the middle of a transaction. Right, we've earned a right at their table to discuss transactions for the future, really getting them strategically prepared to execute. For when that acquisition does appear they're ready to go and it takes a lot of credibility and a lot of time to earn the trust of your clients to be able to earn that right to that table to discuss every topic outside of acquisition or divestiture, and that's really what we pride ourselves to do today.

Jim Fitzpatrick:

Sure, sure. So the goal really is to is to be able to make that acquisition happen, get it, follow it through to closing without it really ever hitting the market, so to speak. Right.

Dave Cantin:

You know, look, it's no different than an open house on the real estate market right. You have a choice On Sunday you could drive around and look at 20 open houses that 30 or 40 people are walking into to look at the same property, or you could strategically work with DCG to map out your next acquisition. And it goes smoothly, confidentially and most of the time the market or industry has no idea of the acquisition until it's announced at the end.

Jim Fitzpatrick:

Right, right, which is so vitally important to the seller and the buyer, for that matter, with regard to the staff that's inside those stores. Right, because if it's a long drawn out situation where, hey, the dealership's going to get sold, what happens? The management team all starts looking around, right, so you kind of want to make that process as quick and easy as possible, right?

Dave Cantin:

It is a key component to any acquisition in the auto space, or outside the auto space for that matter.

Dave Cantin:

Confidentiality is a key component, that's right. And keeping that deal as quiet as possible for as long as possible is equally as important to the buyer and seller and that's why preparation of going into an acquisition is critically important. We work with that buy- side and sell- side to ensure that they're both fully prepared. If we're representing the sell side on the acquisition, we take a lot of effort before introducing that buyer to ensure that we have everything that that buyer could possibly ask for to evaluate the acquisition, make a smart decision and quickly close on that deal. And if we're representing just the buy side, it's the same thing. We're preparing that buyer to act in a speedy way to get in that acquisition and get it successfully closed as quickly as possible.

Jim Fitzpatrick:

Sure, it makes sense. Valuations, Now, this is something that I've spoken to many dealers about over the last few years and it's been kind of all over the map. What's driving valuations today?

Dave Cantin:

Yeah, you know. Great question.

Dave Cantin:

I would say great operators, right, good brands, good operators and great geographic locations. I think after you know, we've learned what you know. Towards the end of 23, as we started seeing more normalized numbers a little bit back at 19, 19 plus 20, 25 percent dealers really had to understand again how to go back to their operation of their business and hold everyone accountable inside to operating at the highest level possible. We utilize our proprietary AI, Jump IQ, to work with our dealers and clients to ensure that we're providing them the information they need to see to understand how they're performing versus their competition. You know, benchmarking, performance metrics, understanding what is my dealership doing versus our competition, same brand, competitive brand in market, outside of market, and it's so critically important today for dealers to have the proper data so they can understand where they're performing versus their competition and know exactly where to go to within their stores to enhance profitability and their operational skillset.

Jim Fitzpatrick:

Sure, sure Now. We just talked about South Florida being a very hot market. It's been that for many years now. Where are you seeing the other hottest markets in the country for acquisitions?

Dave Cantin:

Yeah, look, I think the Sunbelt in the Southeast is always thriving. It's always a destination where dealers want to land and acquire stores or grow their platforms. We're starting to believe it or not, we're starting to see people trend back out West again. Right, you know we see Nevada all the time. The Pacific Northwest is always consistent and California. You know dealers are still doing very well in California. For the first time in a long time we're seeing dealers that left California or never went into California considering to go back in or to enter the state, and that's very promising. You know California is a huge state to do business. We're starting to see a lot of promising acquisitions. We've just had a bunch of them and more to come on the horizon, and we believe that when you look at California, when you look at the Southeast, the Sunbelt, when you look at the Pacific Northwest, those are thriving markets that are continuing to always be consistent and do good business.

Jim Fitzpatrick:

Yeah, so you're saying people drive cars outside of the Sunbelt. That's crazy. I mean it really is amazing how the Sunbelt has been such a focal point. But you've got hugely successful dealerships all over the country and probably with many of your buyers they're looking for those opportunities that go look, show me a high volume Toyota store or Chevy store, whatever the case might be, and not so much of a need for it to be in the Sunbelt, unless, of course, that person wants to retire to Florida that dealer, I should say and to be near their store or something. But otherwise it doesn't make any sense to just focus just on Texas and Florida and the Carolinas right, or Georgia?

Dave Cantin:

Jim, if that's where your portfolio is, there's dealers that still want to stay within their map. There's dealers that want to remain within their geographic location. They don't really want to expand outside of that. That's why they heavily focus in the southeast and Sunbelt. That's why pricing in those markets is incredibly difficult. If you're not in that market today and you want to enter that market, be prepared to get into a bidding war, Be prepared to have to write that big check to enter into that game.

Dave Cantin:

here's again, in all 50 states dealers do really well. Right, there's not, there's not a state that we would say is a horrible state to do business, that dealers don't want to become a dealer. Right, they're still doing very well. I mean, we have, you know, significant large acquisitions throughout the entire country. Right, you know the Midwest. The Midwest is performing really well. You know the Pacific Northwest performs really well, and even the Northeast. Right, you know, dealers always shy away from coming to the Northeast, but I have clients that do incredibly well in the Northeast. So it really you really just have to understand the market and what you can do to penetrate that market. And I'll say this there are a ton of untapped markets that have huge potential that are not in the Sunbelt, not in the Southeast.

Jim Fitzpatrick:

Sure, sure. Now we hear so much about AI in the industry We've done umpteen shows on this topic over the last couple of years and obviously with all of the new technologies that are out there, how is technology changing M&A decision making today?

Dave Cantin:

Wow, it's evolving more faster than we could ever imagine. Right, as I said before, acquisitions are becoming more smarter than ever. Right? You know, dealers and strategic partners, family office, private equity, automotive dealers are becoming so much smarter in getting prepared for an acquisition, and AI is allowing dealers and strategic buyers and partners to position themselves to truly understand the asset that they either have or they're looking to acquire by understanding its potential, you know, and being able to project that potential over time. You know we utilize Jump IQ in all of our acquisitions. It's so incredibly exciting to be able to, to be able to look at a business, understand the evaluation, the enterprise value, the room left on the table and the path to enhance that value. You know, it's kind of funny because if you were to take the 6,500 plus dealers today and ask them what their business is worth, the majority of them have no idea. And it's their biggest and it's their most precious asset they have. They know how much they have in their bank accounts.

Dave Cantin:

They basically understand their portfolio that their wealth management advisor has for them, but what they don't know is the true enterprise value of their dealership or group of dealerships, and Jump IQ allows them to understand that value and then create that roadmap to how you enhance that value. You know, with 40 points of data on each of the 18,000 rooftops across the country, it's critically important to understand where you are, to understand where you need to go, and we're so incredibly excited to share that with the entire country soon.

Jim Fitzpatrick:

Yeah, and that's really just as easy as somebody that's listening, a dealer that's listening right now to connecting with you guys, right. To say, hey, let's spend some time here. Before I even decide to buy or buy more stores or sell my store, whatever the case might be, let's first and foremost talk about the value of it and, based on your technology, you can give it to them pretty much spot on right.

Dave Cantin:

Yeah, look, Jump IQ has been four years since inception. We have the greatest team of developers, our chief artificial intelligence officer is a rock star, and we have maintained such a high level of discipline over the last four years to ensure that we are coming to market with the greatest data. And we do believe that today, Jump IQ offers the greatest data set in the automotive industry between benchmarking, performance metrics, evaluations and strategic targeting, which we spoke about earlier. So, yeah, look, it's critically important to utilize proven data that works to help you be successful and more successful, as you're investing millions of dollars back into the automotive space.

Jim Fitzpatrick:

Yep. Yep. So as we close out the session, let me let me get this from you looking ahead what should dealers expect in the next 12 to 18 months?

Dave Cantin:

Hold on, let me just rub my crystal ball here.

Dave Cantin:

Hold on to me, give me a minute, let's see what pops up.

Jim Fitzpatrick:

That's a loaded question, right? It's really not fair.

Dave Cantin:

But you know, look, if we could just look at trends of where we believe the industry is going, again, you know, consolidation is at an all time height. It's not a quality game anymore, it's not a quantity game, it's strictly quality. Yeah Right, strategic targeting, being smarter, understanding your business. And I really do believe that dealers, more than ever today, are leveraging great technology, great software, great data to evolve their businesses. I think 2025 is going to end pretty strong. I think we're going to go into 26 pretty strong. We're seeing, we're seeing record numbers with manufacturers like Toyota.

Dave Cantin:

You know, everyone should follow what Toyota does, right, I mean?

Dave Cantin:

I don't, I don't, I don't have an unhappy Toyota dealer. You know it's, it's it's really magical what they do right, they always figure it out, they find a way to do it. But look, the industry is consistent. Again, my advice to the dealers today right, try to be as smart as you can of operating your business. And some people say, well, that's pretty easy to say, but it's not because you really need to leverage the proper tools and resources to be able to understand where your business is performing versus the competition. And if you're just judging it off of prior performance and not taking the proper time to understand well, what is my business doing versus all the competitive stores in market and around market same brand or competitive brand you really don't know where the opportunity lies. So we just ask everyone in the industry be as smart as you can, understand the value of your business, understand the performance of your business, and focus on what you're doing versus the competition and you will enhance volume and profitability.

Jim Fitzpatrick:

That's right. That's right. Hey, let me ask you this I've spoken to a couple of friends of mine that have got Stellantis stores and you know earlier, let's say you know, 18, 24 months ago they were feeling like man, it's time to let these franchises go. However, they don't feel that way today about Stellantis. They feel pretty good about its future. What's your take on that?

Dave Cantin:

Jim, I had dinner with a good friend Saturday night. That's a big Stellantis dealer and my last dinner with him was about eight months ago and it wasn't a great conversation. This past Saturday night you would have thought the entire world changed around wow, happy as could be. Yeah, um, you know he, he was thrilled. I mean literally telling us that he is absolutely back to business and making money good. He's loving the support of the manufacturer- again It's still in the beginning stages of this new evolution of stellantis, but definitely has turned a corner and definitely is seeing the future ahead of being profitable. So Stellantis dealers today have something really good to look forward to.

Dave Cantin:

I'm proud of what they did from an OEM perspective, it's a great brand. I mean, when you think about it, it's been a brand that's been consistent for generations for decades, and we all knew it would come back, but I got to tell you I'm surprised on how quickly it rebounded. So I'm proud of the OEM. The dealers are thrilled and that type of attitude is really going to carry over into Q4, into 2026. And I think they're going to have a robust year in 26, Stellantis.

Jim Fitzpatrick:

Yeah, that's fantastic. Dave Cantin, Chairman and CEO of the Dave Cantin Group. You've seen him here before on CBT News, so thank you so much for joining us on the show. Very much appreciate it, Love to get these updates from you and I know you get your hand on the pulse of all things M&A out there. So thanks so much for taking the time,

Dave Cantin:

Jim, we're grateful for your time and always being on these episodes. Thank you so much.

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