Investment

Auto dealerships, family owners, and family offices

Photo: Pixabay
Photo: Pixabay

Here’s an interesting part of the global family enterprise sector – auto dealerships. Many are among the biggest businesses in the world. Many also represent tasty investment targets for groups like family offices and private equity. Here are some interesting facts about the sector.

 

Big…

Auto dealerships are some of the biggest family businesses anyway. Here are some of the big names:

Penske

The Michigan-based group, which is owned by the Penske family, runs one of the biggest auto-dealerships in the world. Founded in 1969, the group, which includes truck leasing, logistics and other transport-linked businesses, has annual revenues close to $30 billion.

Gulf States Toyota

Another big American family-owned dealership is Gulf States Toyota. Founded the same year as Penske, Gulf States is 100% owned by the Friedkin family.  It has annual revenues of more than $8 billion.

Pon Holdings

The Dutch-based family business has been around since 1980 and distributes most of the big German car brands in the Netherlands. Owned by the Pon family, it has annual revenues of around $7 billion.

Arnold Clark Automobiles

One of the biggest car dealerships in the UK, with annual sales of more than $4 billion, Arnold Clark was founded in 1954 and is owned by the Clark family.

Abdul Latif Jameel Company

One of the biggest car dealership business in Saudi Arabia, Abdul Latif Jameel was founded in 1945 and is owned by the Jameel family. It has annual revenues of more than $3 billion.

Zeigler Auto Group

Another Michigan-based auto dealership, Zeigler is one of the fastest growing dealerships in the US. Founded in 1975 and owned by the Zeigler family, the dealership has annual revenues exceeding $1 billion.

…but there are many small and mid-sized ones, too

There may be some big players in the sector, but there are also many smaller and medium-sized family-owned dealerships as well. Some of the mid-sized ones in the US are listed here.

 

Succession in the sector can be complicated…

Here’s probably the most interesting fact about the sector from a family business perspective. Succession at most car dealerships isn’t just decided by the family. In fact, the car manufacturers have a say. If the car manufacturer, which the distributor sells, doesn’t approve of the next generation, then the business can’t remain in family hands.

Of course, the majority of times the manufacturers are fine with the next generation taking over, but not always. And if they aren’t, then the business has to sell. Some say the manufacturers are getting fussier about who takes over the business when succession becomes an issue.

…and this often makes them a tasty takeover target

Family Capital has mentioned this before, but it’s probably worth reiterating given the points above – the sector looks tasty to investors. And many say it’s ripe for consolidation, with smaller dealerships likely to be taken over in the next few years.

Here’s an interesting interview with Aaron Zeigler, president of Zeigler, where he lays out some points from an investor perspective. Zeigler likes buying other family-owned dealerships. He reckons there are a lot of opportunities and he’s proven this with the acquisitions Zeigler has made so far. But, as Aaron says, be aware of the role the car manufacturers have in the process of any sale. They have the power to approve or stop a sale, depending on their own particular criteria.

 

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