Dealerships Are Far Too Valuable To Be Sold Any Other Way

Lots of Activity in the Buy/Sell Market

1899

1905

1911

1917

1923

1929

1935

1941

1947

1953

1959

1965

1971

1977

1983

1989

1995

2001

2007

2013

0100200300400500600700800

Source: SEC Filings

709.272008.11.20 – 2015.06.05Market Takes Off

968% Rise (Nov. 2008-June 2015)

The Kerrigan Auto Retail Index – Hit a Historic High in June 2015

The Kerrigan Index – Hit Historic High in June 2015

Dealership Earnings at an All Time High

Dec 99

Nov 05

Sep 11

Jul 1

7

May 23

Mar 29

Jan 35

Nov 40

Sep 46

Jul 5

2

May 58

Mar 64

Jan 70

Nov 75

Sep 81

Jul 8

7

May 93

Mar 99

Jan 05

Nov 10

350400450500550600650700750

Source: SEC Filings

42% Decrease (June 2015-Jan. 2016)

408.812015.06.05 – 2016.01.28

The Kerrigan Auto Retail Index – Declined 42% Coming into 2016

The Kerrigan Index – Declined 42% Coming into 2016

17+ Million Sales Means Slower Future Growth

Sales Plateau Means 0% Growth

2010 2011 2012 2013 2014 2015 2016*

$211$504 $502 $659

$1,449

$832$572

Source: SEC Filings

Public Dealership Group Acquisition Spending in USSince 2009

- 31%

The Publics Acquisition Spending Declines in 2016

*2016 represents acquisitions for first 9 months

The Publics Acquisition Spending Declines in 2016

Source: SEC Filings

Public’s Capital Allocation through Q3 2016

Stock Buyback$1,143

Dividends$110

Capex$799

Non-Dealership Acquisition

$521

Foreign Acquisi-tion

$163

Domestic Ac-quisition

$578

Publics Allocate Their Capital Elsewhere

“There is no question that our move into the Premier Truck Freightliner retail business was driven because of some of the multiples and goodwill requirements we had on the auto side.”

Roger Penske, Chairman and CEO, Penske Automotive – 3rd Quarter Earnings Call

Publics Allocate Their Capital Elsewhere

2013 2014 2015 2016

9.2x 9.1x

7.6x6.7x

Public’s Estimated Blue Sky Multiples

Source: Kerrigan Advisors Analysis

“This is an interesting industry. If we look back over time, there are times when the private dealers are valued at premiums well above where the publics trade. And there are times where the exact opposite happens.”

Craig Monaghan, President, CEO, Asbury Automotive, 2nd Quarter Earnings Call

Public Estimated Blue Sky Multiples Down Since 2014

6.2x

Public Estimated Blue Sky Multiples Down Since 2014

Source: Automotive News

The Publics Own Just 5.2% of US Dealerships – Auto Retail Remains Fragmented

Auto Retail – Highly Fragmented (Much Consolidation Left)

US Dealership Market Share

14,930 dealerships are ownedBy small groups and individuals

5.2%

82.9%

0.118166666666667

Non-Public DealershipsPublic Dealership Groups

Source: The Banks Report

Number of Transactions2013 to 2016

Number of Transactions – Still Near Record

2013 2014 2015 2016*

114 Transac-

tions

206 Transac-

tions

241 Transac-

tions

229Transac-

tions

+ 17%

*2016 represents first 9 months of acquisitions annualized

+ 81%

- 5%

101%

Increase

Number of Transactions – Still Near Record

2014 2015 2016 Annualized

50 51

65

Multi-Dealership Transactions

Multi-Dealership Transactions Increased in 2016

27%

Increase

Source: The Banks Report

Multi-Dealership Transactions Increased in 2016

2009 2010 2011 2012 2013 2014 2015

$594 $680

$816 $968 $1,000

$1,085 $1,230

Average Revenue of Top 119 Private Dealership Groups(in millions)

107% Increase

Source: Autonews

Private Dealership Groups Significantly Increase in Size

Private Dealership Groups Significantly Increase in Size

Green Street Commercial Property Price Index

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016$60

$70

$80

$90

$100

$110

$120

$130$126

Source: Green Street Advisors, Wall Street Journal

Higher Real Estate Values Result in Higher Transaction Values

Higher Real Estate Values Result in Higher Transaction Values

Annual Rent: $500,000

Total Blue Sky and Real Estate:

$13,100,000

Annual Rent @ 7%: $700,000

Earnings Before Taxes: $800,000

Total Blue Sky and Real Estate:

$14,800,000

Real Estate at7% Cap Rate:

$7,100,000

Blue Sky @ 6x:

$6,000,000

Appraisal: $10,000,000

Blue Sky @ 6x:

$4,800,000

Source: Kerrigan Advisors

Higher Real Estate Values Result in Higher Transaction Values

Domestic51%

Import Luxury19%

Import Non-Luxury29%

Buy/Sell Franchise Transaction Market Share

2016

Domestic35%

Import Luxury22%

Import Non-Luxury43%

2015

Source: The Banks Report and Kerrigan Advisors research

Domestic Franchises in High Demand in 2016

Domestic Franchises in High Demand in 2016

Domestics Will Continue to Benefit from Truck Sales

US Truck versus Car Sales

4 and Under 4 - 5 5 - 6 6 - 7 7 - Priceless

Average Kerrigan AdvisorsBlue Sky Multiple Ranges

Franchise Preferences Influenced by ROI, Capital Requirements and Risk

More Operational Risk

Higher ROI

LowerROI

More Capital Risk

Buyers Franchise Preferences

Luck Running Out?

The Auto Retail Elixir

Source: NADA

New Vehicle and Fixed Operations Sales Growth for the Average Dealership

2013 2014 2015 2016 YTD0%

5%

10%

15%

3.9%

8.3%

New Vehicles Sales Fixed Operations

Fixed Operations in Growth Mode

Fixed Operations in Growth Mode

New Vehicle Used Vehicle Fixed Operations

6% 12%

45%

Source: NADA

Average Dealership Gross Profit Margin by Department

2.1x

7.5x

Fixed Operations and Used Vehicles Drive Dealership Profits

“Parts and service was the highlight of the quarter. We were able to offset the declines in our new and used business with strong growth in parts and service.”

David HultCFO, Asbury Automotive3rd Quarter Earnings Call

Fixed Operations and Used Vehicles Drive Dealership Profits

Source: SEC Filings, NADA

SG&A as a Percentage of Gross Profit YTD

2016

73%86%

13% Delta

Economies of Scale and Scope Support Continued Consolidation

Economies of Scale and Scope Support Consolidation

Source: SEC Filings

12/31

/2015

350

400

450

500

550

600 544.452016.01.28 – 2016.12.30

27% Rise

Since Election

The Kerrigan Auto Retail Index – Experiencing the Trump Bump

The Kerrigan Index – Experiencing the Trump Bump

Sold ToGee Automotive

Sold ToLithia Motors

Sold ToAMSI

Sold ToKDW Automotive

Sold ToMcManes Auto Group

MERCEDES-BENZ OF EDMONTON

WESTSold To

Kendall Auto GroupSold To

AutoNationSold To

Car ProsSold To

Victory Automotive

Recent Transactions