The 2025 Kerrigan OEM Survey provided a glimpse into the perspectives of automotive OEM executives, and it appears they are bullish on the future of the franchise dealership model. 78 percent of those surveyed expect blue sky values to remain steady or increase throughout the year. This marks a more optimistic outlook than the results from the 2024 Kerrigan Dealer Survey, where only 68 percent of dealers predicted similar outcomes.
Profitability projections were also higher compared to past years. Two-thirds of respondents anticipate dealership earnings to either remain steady or grow in the near term. This represents a significant improvement from 2024, when only 46 percent held such expectations. It is an even sharper rise from the 31 percent recorded in 2023. These sentiments highlight a sense of resiliency for dealerships as they continue to adapt and thrive in a rapidly changing market.
The optimism is further reflected in expectations for gross margins, with 52 percent projecting that dealer profits will exceed pre-pandemic levels. A particularly confident 10 percent of respondents even predicted profits to be 25 percent or more above those pre-pandemic averages. It is important to note however that Kerrigan’s data was compiled from over 100 OEM executives before the Trump Administration’s tariffs went into effect, so some sentiment may have shifted as the industry continues to maneuver through their long-term impact.
As the automotive retail landscape evolves, the role of dealers remains pivotal. According to the survey, 92 percent of OEM executives believe dealers will continue to play a major role in managing customer relationships and data over the next five years. Only a small minority, 8 percent, foresee OEMs taking full control of customer data and interactions, marking an 11-point drop from 2024.
These insights affirm dealers’ irreplaceable position as the face of the franchise system, reinforcing their value in delivering personalized customer experiences and building long-term loyalty. Just two years ago, 22 percent of executives believed OEMs would introduce an agency model within the next five years. That number is now down to eight percent and continues to shrink potentially due to ongoing legal action with Volkswagen’s Scout and Honda’s Afeela.
However, some OEMs are taking steps to consolidate their networks for tighter control. One-third of respondents anticipate reducing the number of dealerships in their respective networks in the next five years, and 28 percent expect to exert their right of first refusal to manage dealership buy/sell activity.
Electric vehicles continue to dominate discussions about the future of automotive retail. Despite challenges such as limited charging infrastructure and high vehicle prices, 60 percent of those surveyed projected growth in EV sales. The most positive of the bunch were the 14 percent of respondents who anticipate EVs will account for more than 21 percent of the U.S. automotive market by the end of 2025. This would represent a notable leap from their 10 percent share in 2024, and the 7.5 percent recorded at the close of Q1 2025.
Interestingly, there is a growing divergence in views about the pace of EV adoption. While 80 percent of respondents see the transition moving more slowly than originally planned, 10 percent now believe the rollout is accelerating, driven in part by increased incentives to address oversupply issues in dealer inventories.
OEM executives also identified their biggest hurdles to greater EV adoption, including battery range limitations, weather-related performance concerns, and resale values in the used market. Addressing these issues will be crucial for both OEMs and dealers as they work to meet consumer demand for sustainable transportation solutions.
A new area of focus in this year’s survey is the impact of Chinese automakers on the global and U.S. markets. With China now accounting for over 40 percent of the world’s automotive production capacity and dominating 75 percent of the global EV market, many U.S.-based OEMs are starting to take notice. According to the survey, 70 percent of respondents expressed concerns about the financial and competitive implications of China’s expanding influence. Meanwhile, 76 percent expect Chinese OEMs to enter the U.S. market in the future.
These findings underscore a growing tension in the global automotive industry that has only been heightened by American tariffs on Chinese goods. Chinese manufacturers’ ability to scale rapidly and lead in EV innovation will be increasingly important in the next few years and beyond as the industry continues to navigate the shift toward electrification.
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 2024 Kerrigan OEM Survey, click here. Kerrigan Advisors also is the co-author of NADA’s Guide to Buying and Selling a Dealership.
Contact us to learn more about Kerrigan Advisors’ sell-side services.
All of our conversations are 100% confidential.
