Trump’s tariffs, and the resulting geopolitical uncertainty and financial market volatility, slowed the auto dealership buy/sell market in the first quarter of 2025, according to the just-released Kerrigan Advisors First Quarter 2025 Blue Sky Report.
Buy/sell activity declined 15% year-over-year, with 94 transactions closed, compared to 109 in the first quarter of 2024. Nevertheless, the market remains historically strong and, Kerrigan Advisors predicts, is on pace to reach nearly 400 transactions in 2025, well above the pre-pandemic average. As auto dealerships posted their first quarterly earnings increase since 2022, seasonally adjusted annualized rate of sales (SAAR) rose and inventory remained tight, fueling sustainably high gross margins.
“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.”
Despite the slowdown in buy/sell activity in the first quarter, average public dealership earnings rose year-over-year for the first time since 2022 – increasing from $0.96 million in Q1 2024 to $1.03 million – driven by stable gross profit per vehicle, the surge in new vehicle sales and growth in the parts and service business. Results from the recently released Kerrigan OEM Survey and Kerrigan Dealer Survey indicate rising confidence from both auto executives and dealers that earnings are stabilizing. This optimism regarding the auto retail business stems from the expectation that OEMs, rather than dealers or consumers, will likely bear the brunt of any tariff expense. OEMs are well positioned to do so as their gross margins are significantly higher than dealers and most OEMs are reticent to lose hard-fought market share in the lucrative and competitive US auto sector.
“Dealerships continue to demonstrate remarkable resilience, with strong vehicle margins and stable demand underpinning earnings growth,” said Kerrigan.
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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