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The Buy-Here-Pay-Here (BHPH) market is undergoing major changes due to dealership acquisitions and industry consolidation. Here’s what you need to know:
| Portfolio Characteristic | Large Dealer Groups | Independent Dealers |
|---|---|---|
| Market Share | Top 10 control 9.3% of dealerships | 92% operate 1–5 locations |
| Geographic Scope | Regional or multi-state presence | Focused on single markets |
| Portfolio Size | Large, consolidated holdings | Smaller, targeted portfolios |
| Management | Corporate oversight | Hands-on owner involvement |
| Sales Volume | 24.1% of total retail sales (top 150 groups) | Tied to specific markets |
Key takeaway: Both large dealer groups and independent dealers offer unique opportunities for investors. Large groups focus on scalability and regional growth, while independent dealers succeed with local expertise and personalized service.
The BHPH market is seeing a wave of consolidation, and large dealer group portfolios are at the center of this shift. These portfolios hold a major share of the available inventory, influencing the industry's competitive dynamics.
Big dealer groups are focusing on building strong regional hubs through acquisitions, creating clusters that boost their market impact and streamline operations. As Jim Cockey and Derek Comestro from Bank of America explain:
"When vetting acquisition targets, these large groups consider a few key factors, including brand. In many cases, geography and scalability are bigger priorities."
This approach stands in contrast to the strategies typically employed by smaller dealerships.
With their extensive networks and focus on regional growth, these portfolios handle high transaction volumes. The growing interest from private equity firms and family offices has added a new layer of activity, as these investors are increasingly acquiring dealerships and reshaping the market.
As these groups continue to grow, scalable acquisition strategies will play a key role in their expansion. This shift is redefining how large dealer group portfolios are built, managed, and presented for investment. It also sets the stage to explore how small independent dealer portfolios fit into this changing landscape.
Small independent dealers make up a massive 92% of the market, typically operating between one and five locations. As consolidation across the industry grows, these dealers rely on their local market expertise to stay competitive.
These dealers often thrive in their specific regions. Their localized approach allows them to build strong community ties and maintain a deep understanding of their customers. This commitment often results in well-managed portfolios with steady performance.
The current market environment brings both challenges and opportunities for portfolio investors. While large groups are aggressively pursuing acquisitions, many independent dealers are exploring strategies like succession planning. This includes weighing internal ownership transfers versus selling to outside buyers. These shifts highlight the unique aspects of independent dealer portfolios.
Independent dealer portfolios often stand out due to several key traits:
To navigate this evolving landscape, investors need strong relationships with nationwide intermediaries who perform detailed portfolio analyses.
In response to consolidation trends, some independent dealers are branching into specialized areas like commercial trucks, while others stick to their core Buy Here Pay Here (BHPH) operations. These changes create opportunities for investors to find portfolios with solid performance metrics.
Despite the pressures of consolidation, independent dealer portfolios remain an important part of the BHPH market. Their ability to succeed through focused, locally-driven operations highlights their ongoing relevance in the auto finance industry.
The differences between large dealer groups and independent dealer portfolios play a major role in shaping market trends and influencing investor decisions in today's consolidating market.
Here's a quick comparison of their key traits:
| Portfolio Characteristic | Large Dealer Groups | Independent Dealers |
|---|---|---|
| Market Share | Top 10 groups control 9.3% of dealerships | 92% operate 1–5 locations |
| Geographic Scope | Regional or multi-state presence | Focused on single markets |
| Portfolio Scale | Large, consolidated holdings | Smaller, more targeted portfolios |
| Management Structure | Corporate-level oversight | Hands-on owner involvement |
| Sales Volume | 24.1% of total retail sales (top 150 groups) | Volume tied to specific markets |
These differences highlight why acquisition strategies vary and provide insight into how portfolio performance is evaluated.
Interestingly, data shows that single-location dealerships often outperform larger operations. This success is often attributed to their deep market knowledge and direct, hands-on management.
Bank of America market executives Jim Cockey and Derek Comestro explain:
"Rather than fold additional locations into their portfolios one by one, large public dealership groups are increasingly looking for regional bases: acquisitions that can provide an immediate presence in a new market area or complement an existing footprint".
While large groups focus on expanding regionally, independent dealerships present attractive options for family offices. These investors often prefer to retain experienced management while taking on a quieter ownership role.
The shifting dynamics of the BHPH dealer market offer opportunities for portfolio investors, influenced by the interplay between large dealer groups and independent operators. While large groups account for a sizable share of retail sales, the market remains fragmented.
Three key factors deserve investor attention:
These points highlight the importance of a well-thought-out, tailored investment strategy.
The consolidation trend is expected to continue as dealership owners address succession planning and invest in new technologies. As noted by Bank of America executives Jim Cockey and Derek Comestro:
"When vetting acquisition targets, these large groups consider a few key factors, including brand. In many cases, geography and scalability are bigger priorities."
Although the top 10 groups control only 9.3% of dealerships, both consolidated and independent portfolios present strong investment potential. Aligning strategies with specific portfolio characteristics and risk tolerance remains critical.
More than a decade of Ivan's career has been dedicated to Finance, Banking and Digital Solutions. From these three areas, the idea of a fintech solution called Debepxert was born. He started his career in Big Four consulting and continued in the industry, working as a CFO for publicly traded and digital companies. Ivan came into the debt industry in 2019, when company Debexpert started its first operations. Over the past few years the company, following his lead, has become a technological leader in the US, opened its offices in 10 countries and achieved a record level of sales - 700 debt portfolios per year.
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