Dealership Buy/Sell Market on Pace for Another Record Year as Valuations and Earnings Climb in the Third Quarter

An unprecedented 445 transactions were completed through September, according to Kerrigan Advisors’ Third Quarter 2025 Blue Sky Report®, as the strength of the affluent consumer drew publics toward luxury brands, and sustained demand for in-market acquisitions reinforced regional scale; AI continues to influence buy/sell market dynamics while tariffs have little impact

The auto dealership buy/sell market maintained its record-pace through the third quarter of 2025, with 445 transactions completed in the trailing twelve months ending September 2025, representing an 11.4% compound annual growth rate since 2019, according to the just-released Third Quarter 2025 Blue Sky Report^® by Kerrigan Advisors. With continued strength in dealership earnings and improved affordability driving solid new vehicle demand, blue sky values rose in the third quarter, supported by continued buyer demand for high-quality franchises and the pursuit of regional scale.

While tariffs had little measurable impact on the buy/sell market, the cost-saving promise of AI is building confidence. At the same time, the financial resilience of the affluent consumer is drawing public dealer groups toward luxury and ultra-luxury brands, contributing to elevated buy/sell activity within those segments and reinforcing Kerrigan Advisors’ prediction of another record year.

“Dealers entered the third quarter with strong conviction,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “The combination of rebounding earnings, improved consumer affordability, the industry’s ongoing shift toward regional scale and the emergence of AI-enabled operational efficiencies is reinforcing buyer demand across most franchise segments. We continue to see more buyers than sellers in high-growth markets, and the competitive pressure is supporting blue sky values as demonstrated by the Kerrigan Blue Sky Index which rose again in the third quarter.”

Dealers continued to prioritize local expansion in 2025, with 65% of franchises acquired by in-market buyers, reinforcing the industry’s trend toward regional consolidation. This trend was most pronounced in the South, accounting for a record 56% of the buy/sell activity through the third quarter. The report notes that smaller private groups increased their share of total acquisitions as average transaction size declined, further contributing to the rise in single-point transactions as more dealers jettison their under-performing franchises, doubling down on high-performers. These moves reflect the report’s finding that more dealers are building scaled regional platforms to manage rising operational complexity and support AI-enabled efficiency gains.

Additionally, public dealer groups increased their total capital available for investment by nearly $900 million over the last 12 months to $8.27 billion, which is expected to support continued expansion and the closing of additional acquisitions in the fourth quarter. The public groups’ tremendous access to capital coupled with their rising blue sky multiples (up to 6.4x for the group) resulted in 53% of their capital being allocated to US dealership acquisitions through the third quarter, more than double 2024’s level when international and non-US dealership investments captured the greatest share of spend.

Industry Performance, Earnings Drivers and Tariff Impact

According to the report, improved vehicle affordability – now 18% better than its December 2022 peak – along with rising OEM incentive spending and a pull-forward of EV demand ahead of the tax credit sunset, helped lift new vehicle sales back above the 16 million SAAR in the third quarter of 2025. OEMs’ production discipline kept inventory near 50 days’ supply according to Wards, well below pre-pandemic levels, sustaining elevated new vehicle margins. Fixed operations also remained a key profit driver, with average dealership service and parts gross profit rising to $4.91 million, up 48% since 2020.

Although there were early concerns that tariffs would push vehicle prices higher, automakers have largely resisted broad increases to protect market share. Instead, OEMs appear to be absorbing much of the impact – estimated at more than $10 billion through October 2025 according to Anderson Economic Group – by cutting their expenses and normalizing their gross margins toward pre-pandemic levels. Kerrigan noted that one indication of tariffs’ minimal impact on auto retailers comes from the initial results of Kerrigan Advisors’ 7th annual Dealer Survey. Of the over 600 dealers surveyed, 41% indicated tariffs have had no impact on their business, while 16% plan to acquire more dealerships as a result of tariff policies.

As a result of these moves, industry earnings in the trailing twelve months ending September 2025 are now 83% above pre-pandemic levels, supported by higher new vehicle sales, resilient gross margins, rebounding used vehicle prices, and fixed operations growth. Integration of AI tools into dealership operations to improve productivity and streamline workflows, further contributed to efficiency gains.

“The industry’s earnings performance remains exceptionally strong,” said Erin Kerrigan. “Dealers continue to benefit from healthy consumer demand, disciplined inventory levels, and robust fixed operations, all of which are contributing to sustained profitability above historical norms.”

Third Quarter 2025 Buy/Sell Trends

For the third quarter of 2025, Kerrigan Advisors identified the following trends that the firm expects will impact the buy/sell market for the remainder of 2025 and into 2026:

• Non-Luxury Image Upgrade Announcements Pressuring More Dealers to Consider a Sale
• Buyers Interest in Ultra Luxury Franchises on the Rise

Non-Luxury Image Upgrade Announcements Pressure More Dealers to Consider a Sale

Ford, Chevrolet, Buick GMC, Subaru and Honda have introduced expensive new image programs in recent years requiring multi-million-dollar facility overhauls with no clear evidence of improved sales or profitability. These requirements come at a difficult time. Commercial real estate values are down and construction costs remain elevated; this, coupled with dampened demand from non-luxury consumers, who continue to face negative equity, long loan terms and higher default rates, make the investments hard to justify. As a result, non-luxury dealers are opting to sell rather than commit to large, high-risk real estate projects.

“The challenge with these new image mandates is the lack of clear financial rationale,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “Dealers are being asked to make massive commitments at a time when they are already navigating higher fixed costs and elevated construction expenses. Without a defined return, many owners are reevaluating whether these investments make strategic sense.”

Buyers Interest in Ultra Luxury Franchises on the Rise

The top 10% of US earners now drive a record 49% of all retail spending and own 87% of publicly traded stocks, which is fueling strong consumer demand for ultra-luxury goods, including ultra-luxury vehicle sales. Reflecting this, 15 ultra-luxury franchises sold through the third quarter of 2025, more than double all of 2024, with the market on pace for 20 transactions this year.

“Luxury and ultra-luxury franchises continue to outperform due to the financial strength of the top 10% of earners,” continued Ryan Kerrigan. “These consumers are less sensitive to interest rates and inflation, which is motivating both private and public acquirers to pursue top luxury brands aggressively, particularly given their rightsized dealer network.”

Blue Sky Multiple and Outlook Adjustments

For the third quarter of 2025, Kerrigan Advisors made two adjustments to its blue sky multiples and one change to its multiple outlooks in this report.

Multiples Increased for Chevrolet and Buick GMC

Kerrigan Advisors made two domestic multiple upgrades in the third quarter, raising Chevrolet to a range of 4.0 to 4.5 times and Buick GMC to a range of 3.0 to 3.75 times, reflecting General Motors’ strong year-to-date sales growth and disciplined inventory levels. Chevrolet and Buick GMC led the non-luxury market in sales gains, up 9.3% and 11.3%, respectively through the third quarter, despite headwinds from the Trump administration’s tariffs. General Motors’ improving financial performance – including faster-than-expected tariff cost reductions and a pullback from unprofitable EV programs – further support upgrades.

Outlook Upgraded for Cadillac / Monitoring Outlooks for JLR and Lexus

Cadillac was also upgraded to a positive outlook, due to its 19.4% year-to-date sales surge and the likelihood of future multiple expansion if momentum continues.

Kerrigan Advisors is also monitoring the JLR and Lexus franchises for future outlook and/or multiple upgrades. JLR’s sales rose 23% through the third quarter of 2025. Although the August 31^st cyberattack halted production, dealers report that the current US inventory is sufficient to support sales and will likely generate higher gross profits as supply remains constrained. Kerrigan Advisors notes that demand for Land Rover franchises is exceptionally strong, positioning the brand for a potential multiple upgrade in 2026.

Likewise, Lexus continues to outperform the industry, with its dealers achieving record profitability, one of the only franchises to surpass their pandemic earnings peak. As a result, demand for the limited number of Lexus franchises not already owned by top consolidators, far surpasses supply available for purchase, driving the expectation of a multiple upgrade in 2026.

“These positive adjustments reflect the continued strength of the US auto retail market,” said Erin Kerrigan. “Public and private acquirers alike are concentrating capital towards strong brands with consistent sales momentum, disciplined inventory management and clear earnings visibility within their dealer network. In this regard, Lexus continues to hit on all cylinders.”

Highlights from the Third Quarter 2025 Blue Sky Report® by Kerrigan Advisors include:

• 445 buy/sell transactions were completed in the trailing twelve months ending September 2025, a new record.
• For the first nine months of 2025, multi-dealership transactions declined 19%, to 62 from 77, while the share of single-store transactions climbed to 81% from 76% in 2024.
• The Kerrigan Blue Sky Index rose 3.5% in the third quarter of 2025 to 176, from 170 in 2024, reflecting sustained long-term valuation strength even amid wider dispersion across franchises.
• Import luxury franchises represented 19% of the buy/sell market in the first nine months of 2025, a new record for the segment, while domestic franchises accounted for 49% of franchises sold.
• Industry earnings remained strong in 2025, with average public dealership pre-tax profits rising 5% year-over-year in the trailing twelve months of 2025, climbing from $4.0 million to $4.2 million.
• The US public dealer groups’ blended average blue sky multiple rose nearly 7% to 6.4x in the third quarter of 2025 from 6.2x in the second quarter of 2025.
• In the first nine months of 2025, the publics rebalanced their capital allocation to US dealerships, which rose to 53% of capital deployed, more than double 2024’s 22% level.

The Blue Sky Report^®, published by Kerrigan Advisors, is the auto retail industry's most comprehensive and authoritative quarterly report on dealership M&A activity, as well as franchise values. The quarterly report, received by over 16,000 industry recipients in 35 countries, includes analysis of all dealership transaction activity for the year, and lays out the high, average and low blue sky multiples for each franchise in the luxury and non-luxury segments. For more details and to preview the report, click here. To sign up to receive the quarterly report, click here.

Kerrigan Advisors also releases The Kerrigan Index™ composed of the seven publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail. To access The Kerrigan Index™, click here.

About Kerrigan Advisors

Kerrigan Advisors is the leading exclusive sell-side advisor and thought partner to auto dealers nationwide. Since its founding in 2014, the firm has led the industry with the sale of more than 300 dealerships generating more than $10 billion in client proceeds, including two of the largest transactions in auto retail history – the sale of Jim Koons Automotive Companies to Asbury Automotive Group and Leith Automotive to Holman. The firm advises the industry’s leading dealership groups, enhancing value through the lifecycle of growing, operating and, when the time is right, selling their businesses. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, Kerrigan Advisors is the only firm in auto retail exclusively dedicated to sell-side advisory, providing its clients the assurance of a conflict-free approach.

Kerrigan Advisors monitors conditions in the buy/sell market and publishes an in-depth analysis each quarter in The Blue Sky Report®, the industry authority on dealership buy/sell market trends and valuations and includes Kerrigan Advisors’ signature blue sky charts, multiples and analysis for each franchise in the luxury and non-luxury segments. To download a preview of the report, click here. The firm also releases The Kerrigan Index™ comprised of the seven publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail. To access The Kerrigan Index™, click here. To read the 2024 Kerrigan Dealer Survey, click here. To read the 2025 Kerrigan OEM Survey, click here. Kerrigan Advisors also is the co-author of NADA’s Guide to Buying and Selling a Dealership.

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We continue to see more buyers than sellers in high-growth markets, and the competitive pressure is supporting blue sky values as demonstrated by the Kerrigan Blue Sky Index which rose again in the third quarter.