In today’s episode of CBT Now, we’re joined by Erin Kerrigan, founder and managing director of Kerrigan Advisors, to discuss current market trends in the buy-sell market and the Kerrigan Advisors’ latest Blue Sky Report.
Despite the recent shifts in U.S. trade policy, including the announcement of 25% tariffs on autos that shook the automotive industry, Kerrigan remains steadfast that 2025 will be a record year for the buy-sell market. While the tariffs will impact the industry, it’s unlikely to derail the buy-sell market’s progress.
Based on the current market activity and trends thus far, Kerrigan predicts that the buy-sell market will see a slight summer slowdown before picking up again in the final quarter.
Regarding tariffs, Kerrigan notes that Honda and Toyota are positioning themselves well during the turmoil. Both companies have committed to holding prices steady. The average vehicle price has increased roughly 50% since pre-pandemic, equating to approximately a 10% yearly increase. She notes that further cost increases will be hard to justify in this climate, and any added fees–from the OEM or dealer–will likely face consumer pushback.
Chinese automakers are rapidly expanding their footprint overseas, creating a dramatic shift in the global automotive industry. The country’s rapidly growing market share will have implications for legacy OEMs. Kerrigan stresses that it’s crucial for dealers to consistently look at what’s happening beyond our national borders and understand how exposed their particular franchise is to the growth of the Chinese market.
The OEMs seeing the most shrinking market share in China are Volkswagen, General Motors, Nissan, BMW, and Mercedes-Benz. She notes that once the tariff situation is worked out, it will be more appealing for OEMs to build on American soil because, unlike China, the United States is not kicking anyone out of the market.
The Kerrigan Advisor’s recent Blue Sky Report reveals that 2024 set another record for buy-sell activity, with 438 transactions and nearly 700 franchises sold. Public groups have alreayd commited over $3.5 billion in U.S. dealership acquisitions so far this year, with more major deals expected in the near future.
The Kerrigan Advisors started the year off with a significant transaction. They facilitated the sale of Leith Automotive Group, consisting of 30 dealerships, to Holman, one of the country’s largest private dealership groups.
Regarding market demands, the Carolinas and Southern markets are in high demand. In 2024, the Southern markets accounted for the majority of buy-sell transactions. There was a decline in activity in the Northeast and the Midwest, whereas the West normalized.
On average, valuations decreased roughly 20% from their peaks. However, they’re still roughly double from pre-pandemic levels. Kerrigan predicts valuations will rise again in 2025 compared to 2024 because profits are increasing.
While industry consolidation is continuing, it’s highly unlikely that independent or family-owned dealerships will disappear entirely. The public groups and top 150 dealers now account for about 30% of total industry revenue. They are gaining approximately 1% share per year. However, there is still room in the market for strong, community-rooted dealerships—especially in rural and non-metro areas.
"There's so much still to be worked out, but the one thing we know for sure is that car dealers are the friction that keeps the whole industry going." – Erin 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 over 285 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.
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