Buy-sell transactions surge as industry consolidation deepens — Ryan Kerrigan | Kerrigan Advisors

Despite industry headwinds and lingering uncertainty, dealership buy-sell activity remains strong. On today’s episode of Driving Solutions, Ryan Kerrigan, managing director at Kerrigan Advisors, unpacks what’s driving the market and what the new year could bring.

Kerrigan Advisors posted a record year in 2025, facilitating buy-sell transactions involving 57 franchises. Among the most notable transactions closed late in the year was the sale of Louisiana-based All-Star Automotive Group to Hudson Automotive Group. The deal included 12 rooftops and 16 franchises, making it one of Kerrigan’s largest deals of 2025. They also represented the sale of Arlington Toyota, a second-generation dealership near Chicago’s O’Hare Airport, to Andy Mohr Automotive Group.

Additional buy-sell activity included divestitures by several well-known dealer groups. Car Pros sold three dealerships in Washington state, while the Hennessy family completed a divestiture in the Atlanta market. Asbury Automotive Group also completed transactions in Georgia and Utah. Collectively, these deals reflect a continued pattern of portfolio realignment among large dealer groups.

Industry consolidation shows no signs of slowing. Before the pandemic, approximately 2% of franchises changed hands annually, implying an average dealership hold period of about 50 years. Since 2020, that figure has doubled to roughly 4%-5% per year. As a result, the average dealership is now held for 20 to 25 years, signaling a shift in ownership dynamics.

"The business is a much healthier business model today. We know that overall profit margins are substantially higher."
— Ryan Kerrigan

Smaller dealer groups continue to represent the majority of sellers. Dealers operating one to five stores account for most divestitures, while the fastest-growing buyers are larger auto groups. The number of dealer groups owning more than 25 stores has more than tripled over the past decade, and groups with 11 to 25 stores have more than doubled. This growth has come largely at the expense of smaller operators, reinforcing a long-term trend toward scale.

Despite challenging headlines, dealer sentiment has improved meaningfully. Kerrigan Advisors’ latest Dealer Survey, which gathered responses from more than 500 U.S. dealers, shows that optimism has returned for the first time in three years. Twenty-nine percent of surveyed dealers report feeling more positive than negative about their business trajectory in 2026.

The shift reflects a normalization of margins from historically elevated COVID-era levels rather than a deterioration in fundamentals. A third of dealers expect profits to increase in 2026 compared with 2025, while roughly half anticipate profits will remain stable. By comparison, only 14% of dealers surveyed in 2024 believed 2025 would outperform the prior year, underscoring the improvement in outlook.

Overall dealership profitability remains strong, a trend reflected in rising Blue Sky valuations. Except for a small number of brands facing temporary challenges, franchises across the industry are profitable, and average margins remain well above pre-pandemic levels.

Scout Motors remains a significant concern for the dealer body. The Volkswagen-backed EV startup recently received provisional approval to sell vehicles directly to consumers in Colorado, marking the first time a legacy automaker has been granted such permission. While Scout is currently limited to EVs and the license is temporary, the development represents a significant challenge to the franchise model and warrants close attention.

Volkswagen’s aggressive stance is particularly notable given its global footprint. While the U.S. market is important to the brand, it accounts for a smaller share of its overall business than domestic automakers, such as Toyota or Honda, giving Volkswagen greater flexibility to test unconventional strategies.

At the same time, the EV market remains under pressure. Automakers have pulled back after investing heavily to accelerate EV pipelines, resulting in major write-downs, canceled programs, and excess infrastructure spending. Dealers, many of whom were required to invest significantly in EV readiness, continue to feel the effects of a market that did not materialize as quickly as expected.

There are early signs of cautious optimism surrounding Stellantis. The automaker has been working to realign pricing, reduce inventory overhang, and simplify its lineup, particularly within the Jeep brand. While widespread dealer confidence has yet to return fully, these efforts are viewed as necessary steps toward stabilization. Kerrigan notes that Stellantis has historically demonstrated the ability to recover, even if the process has been uneven.

Looking ahead, Kerrigan Advisors is entering 2026 with the strongest project pipeline in several years. The firm is bringing a slate of high-quality, high-value transactions to market and reports strong interest from major buyers nationwide. Momentum from late 2025 has carried into the new year, positioning the firm for another active and competitive period in dealership buy-sell activity.