According to figures compiled by dealership broker Nancy Phillips (603-658-0004; www.nancyphillips.com),  2006 has been a tough time to be a car dealer, especially the owner of a domestic franchise. Outside of a few high-profile transactions that reportedly commanded eye-popping "blue sky" numbers, dealership buy/sells over the last six months indicate a marked drop in valuations.

Compare the chart included in this issue with the similar information in the April 15, 2006 issue of Car Dealer Insider to see what we mean. Nissan, which was a rising star just a year or so ago, seems to have lost most of its allure. In the April report, a Nissan franchise sold with a blue-sky value of $3,623 per new vehicle retailed, which was itself a decline from previous reports. In our October example,
another Nissan store went for only $2,245 PNVR. (Note:  Ms. Phillips expresses franchise valuations in terms of the number of new vehicles the dealership sells, as opposed to the more common multiple of trailing earnings).

Go to www.dealersedge.com and search the archives for articles that mention Nancy Phillips. Compare the figures in her current reports with those of the last year or so to get a more accurate sense of the trend in dealership valuations.

Ms. Phillips provides a similar analysis ("blue sky" expressed in terms of dollars per-new-vehicle-retailed) for six actual transactions in which she was involved over the last six months. Nancy Phillips' report is reproduced below.