Maryann Keller to Discuss Car Dealership Valuation Paradox: With Revenues and Earnings Down, Values Appear to be Rising Says "DealersEdge".

Business Editors

EAST BRUNSWICK, N.J.--(BUSINESS WIRE)--June 15, 2001

Have the rules really changed? Maryann Keller and Sheldon Sandler will discuss the apparent contradiction between car dealership valuations and dealership performance.

For most of the last four years, the price of publicly held AutoNation stock seemed caught in a death spiral, a one-way ride to oblivion as the stock dropped from a high of $44 a share and languished in the $4 to $5 range. The plunge gave credence to industry critics who saw the company's market price problems as proof that the concept of publicly owned car dealerships was fatally flawed. Rumors spread last year that AutoNation would variously be taken private by a group of insiders or that the dealerships would be sold off market by market.

But a funny thing happened on the road to oblivion. While the market price of its shares was going nowhere, AutoNation was rolling along nicely as a cash flow machine. And with "car guys" firmly in charge, the company has been honing its vision and, like the rest of the auto retailing business, going back to the basics.

The South Florida Sun Sentinel last week noted, "Gone are the used-car megastores, the auto rental operations, the billboard company, the waste management business -- even the ownership of its own 30-story company headquarters. Gone are plans to blanket the country with a chain of new-car dealerships united under one brand and all offering no-haggle prices. H. Wayne Huizenga isn't gone, but the founder of AutoNation Inc. has become a back-seat driver and turned the controls over to a management team that includes an ex-president of Mercedes-Benz USA Inc. and South Florida's best-known car dealer (Mike Maroone)."

And now, with revenues and profits declining in the first quarter of 2001, Wall Street is again showing some enthusiasm for AutoNation and its efforts, giving rise to what some analysts see as the "Valuation Paradox." With reported earnings and revenues falling, the market caps of the publicly owned dealerships have been increasing. In fact, share prices for all of these firms are at or near their 52-week highs.

But does the Valuation Paradox carry over to privately owned car dealerships? In the case of the public groups, the market had low expectations. When companies like AutoNation, Sonic Automotive, and CarMax easily beat those low targets, investors responded by bidding up the value of the companies.

To get a better idea of how these trends are affecting valuations for the majority the nation's car dealers, DealersEdge had to go to a couple of well known industry insiders, industry analyst and consultant Maryann Keller and dealership financial adviser Sheldon Sandler. We asked these two experts to share their insights into the trends governing dealership valuations during a unique teleconference on June 26 at 1:30 p.m. EDT. Car dealers, dealership managers, and people from related industries who wish to participate in the teleconference will be able to do so from the comfort and convenience of their own offices - no travel expenses, no time out of the store. For more information about the program, contact the teleconference coordinators at KRM Information Services (800-775-7654) or visit www.dealersedge.com.