The auto dealership buy/sell market experienced a 15 percent decline in activity during Q1 according to the Kerrigan Advisors First Quarter 2025 Blue Sky Report. The dip was largely due to uncertainties surrounding the Trump administration’s auto tariffs.
There were 94 transactions completed in the first quarter, down from 109 in the same period last year. Still, resilient dealership earnings and tight inventory levels have buoyed confidence throughout the sector. Average public dealership earnings rose to $1.03 million in Q1, a seven percent year-over-year increase. This marks the first earnings growth since 2022. The Kerrigan Blue Sky Index was flat in the first quarter and is still 70 percent above 2019 levels.
Despite the first quarter transaction slowdown, the market is expected to remain robust, with rising confidence from both executives and dealership owners. Kerrigan Advisors is still estimating nearly 400 transactions this year.
“Economic uncertainty has had some impact on the buy/sell market in the first quarter of 2025, but its fundamentals remain strong, and 2025 is shaping up to be another solid year for transactions,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “With dealership earnings on the rise, record buyer liquidity, and a steady flow of single-store sellers coming to market, we predict that activity will accelerate in the second half of 2025 and valuations will remain strong – particularly in high-growth regions like the South, where premiums are being paid because demand continues to outpace supply.”
Tariffs have already influenced public dealership strategies, with nearly half of public dealer group capital allocated to stock buybacks rather than acquisitions in Q1. U.S. dealership acquisition spending was just $154 million to start the year, down from $1.19 billion in 2024. Kerrigan Advisors believe this is just a short-term shift though, as the broader trend of industry consolidation continues.
The Top 150 dealerships accounted for 33 percent of industry revenue in 2024, an increase of 10 percent from 2023. That number will most likely continue to rise as more single dealerships go up for sale. Private single-store sellers are entering the market in higher numbers due to mounting operational costs, including facility upgrades and EV infrastructure demands. Single-store transactions were 79 percent of all dealership sales in Q1, up from 68 percent in 2023.
Meanwhile, OEMs are favoring fewer, larger dealership groups that can meet complex operational demands. According to Kerrigan Advisors OEM survey, one-third of OEM executives plan to reduce dealer counts over the next five years.
“If the Trump administration proceeds with broad-based auto tariffs, OEMs, rather than dealers, will likely absorb most of the cost,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “The strategic industry consolidators know this and are taking a long-term view when seeking prized dealership assets. We do not expect the final tariff policy to meaningfully impact 2025’s buy/sell activity, though we will see some changes in franchise valuations with certain winners and losers depending on OEM’s US manufacturing capabilities and financial capacity to effectively react.”
Despite the current tariff uncertainty, market optimism remains high. Toyota continues to command premium valuation due to its strong U.S. manufacturing presence and financial stability. Luxury franchises such as BMW, Lexus, and Porsche are also well-equipped to absorb tariff costs, given their higher profit margins and affluent customer base. The impact of tariffs is not yet fully known, but it appears as if it will not be even across all brands.
“The buy/sell market is becoming more polarized between high and low demand franchises. This situation will likely become even more exacerbated when tariffs are finalized, with certain franchises better positioned than others to absorb the expense. Top consolidators are doubling down on the strongest franchises and geographies,” said Ryan Kerrigan. “With earnings rebounding and the policy environment evolving, we anticipate a reacceleration of buy/sell activity in the second half of 2025, especially if tariffs are reduced.”
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 more than 290 dealerships generating more than $9 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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