Dealership Buy/Sell Market Set New Record in 2025 as Consolidation Accelerated and Blue Sky Values Rose
INCLINE VILLAGE, Nev.--( BUSINESS WIRE)--The auto dealership buy/sell market set a new annual record in 2025, with 458 transactions, representing 688 franchises sold, a 5% increase compared to 2024, according to the just-released 2025 Blue Sky Report ® by Kerrigan Advisors. Ongoing buyer demand, strong earnings and the continuing consolidation trend drove 2025 buy/sell activity resulting in elevated blue sky values in 2025. Over the last five years more than 3,500 franchises transacted in the US – an estimated 15% turnover rate, nearly doubling the pace of the five years preceding the pandemic.
“While buy/sell activity was strong in 2025, the valuation environment is increasingly bifurcated, with high-performing franchises continuing to command price premiums, while lower performing or smaller-scale dealerships face more limited buyer interest,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “The leading consolidators are also becoming more precise and strategic with their capital deployment, prioritizing scale within existing markets and targeting high-volume dealerships to drive operational efficiencies, leading to a buy/sell market that is increasingly bifurcated.” Kerrigan noted that the majority of transactions in 2025 were completed in markets where buyers already had an operating presence, highlighting the increasing importance of geographic consolidation and the more precise acquisition strategies employed by growing dealership groups focused on regional scale.
The strength of the 2025 buy/sell market was rooted in improving dealership sales and normalized, yet structurally higher, profitability. US retail new vehicle sales reached 14.5 million units in 2025, surpassing 2019’s level and driving total industry revenue to a new high, while public dealership pre-tax earnings stabilized at approximately $4.07 million per dealership – 32% above pre-pandemic averages – providing buyers with confidence that today’s earnings represent a sustainable floor. New vehicle gross profit per unit averaged $3,383, still 63% above 2019 levels, supported by disciplined OEM production and a more balanced inventory environment.
Fixed operations also remained a key profit driver, with gross profit approaching $5 million per dealership, supported by an aging vehicle fleet and increased service demand. Used vehicle fundamentals also began to improve as rising lease maturities are expected to replenish supply, supporting transaction volumes and dealership profitability in the coming years. Together these factors reinforce the view that current earnings represent a structural baseline rather than a temporary peak.
“The industry’s earnings performance remains exceptionally strong, fueling buyer demand for dealerships and sustaining the pandemic era seller’s market, particularly for the top franchises,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “Many dealers continue to benefit from OEMs’ more disciplined inventory levels, higher new vehicle margins and robust fixed operations growth, all of which are contributing to sustained profitability above historical norms.”
According to the report, as the most sought-after franchises and markets become increasingly concentrated among top dealership groups, acquisition opportunities are more limited, resulting in a widening supply/demand imbalance. This has resulted in a K-shaped valuation environment where demand and pricing for the strongest franchises – particularly Toyota, Lexus and select luxury European imports – continues to intensify, while weaker brands with elevated inventory levels, low sales per franchise and inconsistent profitability face declining buyer interest and weak valuations. In the fastest-growing US metros, the Top 150 dealership groups now control the majority of premier franchises, further limiting the supply of the highest quality assets, resulting in steep price premiums for the few top franchises still available to acquire.
Geographically, the buy/sell market was once again led by the South, where population growth, lower cost of living and favorable business conditions drove strong buyer demand and higher pricing. In terms of franchises, domestics rebounded in 2025, representing 51% of the buy/sell market, driven by improving sales performance and stronger projected profitability. Despite this increase, domestic franchises remain underrepresented relative to their overall market share, reflecting continued buyer preference for higher-volume import and luxury brands. Notably, the publics’ top five acquired franchises in 2025 were all import and/or luxury, led by Mercedes.
According to the report, the publics increased their share of the buy/sell market in 2025, allocating nearly 50% of their capital to US dealership acquisitions, representing $4.4 billion in spend, the second highest level on record. The year was marked by one mega acquisition in Asbury Automotive’s purchase of the Herb Chambers Group in New England, providing Asbury with an instant and significant market share in a new market for the company.
To fund expansion and better compete with public acquirers in the buy/sell market, private dealership groups turned to outside capital sources in 2025, reflecting the rising cost of acquisitions. Since 2021, the number of dealerships owned by the Top 150 groups backed by outside capital increased 52%. In 2025 alone, roughly 10% of all franchise acquisitions were completed by buyers using outside capital partners – a figure Kerrigan Advisors expects to rise as the capital required to compete in a more technology-driven consolidated marketplace increases.
“The scale imperative as well as the rising acquisition costs for the most in-demand franchises are increasingly driving up the capital required to grow,” said Ryan Kerrigan. “Rather than ‘betting the farm,’ more dealer families with the management team and size to take on an outside investor are opting to diversify risk while preserving growth optionality by bringing on an institutional capital partner. We see this as a growing trend and one that will continue to shape auto retail consolidation in the future.”
AI’s Impact on the Buy/Sell Market
According to the report, some long-time dealers are considering a sale, driven in part by fatigue with the accelerating pace of technological change, particularly the rapid emergence of artificial intelligence (“AI”). AI will undoubtedly require another re-imagination of the dealership operating model. For many long-tenured dealers, the capital requirements, operational re-engineering and execution risks associated with AI-driven retailing are daunting – and prompting their decision to sell.
Carvana’s expansion into the new vehicle market, including the addition of six Stellantis franchises in the last 12 months, underscores the rapidly shifting impact of technology in auto retail. Leveraging an aggressive AI-enabled operating model, Carvana’s personnel expense as a percentage of gross profit is half the industry average, while its revenue per rooftop is over 7x higher, illustrating how technology-driven platforms can amplify throughput and dramatically reduce labor costs. For traditional dealers, this evolution represents not simply a new competitor, but a potential blueprint for the industry’s next era.
“While the disruption ahead concerns some dealers, it is ultimately more likely to produce a structurally stronger and more profitable auto retail sector for growing dealer groups. Well-capitalized consolidators are leaning into this transition with disciplined acquisition strategies - for them, industry transformation represents opportunity, not threat, and will be the key driver of continued consolidation in 2026 and beyond,” said Erin Kerrigan.
Blue Sky Multiple and Outlook Adjustments
In the fourth quarter of 2025, Kerrigan Advisors made several adjustments to its blue sky multiples and outlooks. These adjustments reflect improving OEM performance, disciplined inventory management and sustained demand for high-performing franchises.
Fourth Quarter Multiple Increases: Honda, Chevrolet, Ford, Buick GMC, Lexus, BMW, Cadillac
In the non-luxury segment, Kerrigan Advisors increased four blue sky multiples – Honda, Chevrolet, Ford and Buick GMC – reflecting improved buyer demand driven by stronger projected future earnings.
In the luxury segment, Kerrigan Advisors increased three blue sky multiples this quarter – Lexus, BMW and Cadillac – driven by strong profitability, disciplined inventory management and sustained buyer demand for high-performing luxury brands.
“Blue sky multiples continue to expand as buyers concentrate on the strongest franchises,” said Erin Kerrigan. “Capital is increasingly flowing to brands with consistent sales momentum, disciplined operations and consistent earnings, reinforcing valuation strength at the top end of the market.”
Highlights from the 2025 Blue Sky Report® by Kerrigan Advisors include:
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 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 over 320 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 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, Kerrigan Advisors is the only firm in auto retail exclusively dedicated to sell-side advisory, providing its clients with 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®, which 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 monthly 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 read the 2025 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.