Kerrigan Advisors Second Quarter 2025 Blue Sky Report® reveals most active twelve-month period of dealership buy/sell transactions in industry history, with over 450 deals completed; blue sky values are on the rise as tariffs shift franchise valuations and OEMs absorb costs
INCLINE VILLAGE, Nev.--(BUSINESS WIRE)--The auto dealership buy/sell market continued its record-breaking run in 2025, with 220 transactions completed in the first half of the year, and 454 in the trailing twelve months ending June, according to the just-released Second Quarter 2025 Blue Sky Report® by Kerrigan Advisors. The quarter’s strong industry earnings, the continued resilience of the dealership business model, and renewed activity from the elimination of the CARB mandate helped drive dealership buyer confidence and lift blue sky values to 75% above pre-pandemic averages, in spite of some market challenges and tariff policy uncertainty, which is reshaping consumer purchasing patterns.
“Dealership earnings’ growth in 2025 is giving dealership buyers the conviction to compete aggressively for high-quality franchises. The market is seeing more buyers than sellers, as it defies economic pressures from tariffs and buyers seek to deploy capital to expand their existing market share,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “The industry’s improved profit outlook, coupled with abundant dealer liquidity and OEMs’ efforts to absorb tariff costs, is motivating buyers and sustaining competitive blue sky values in today’s active buy/sell market.”
According to the report, tariffs are prompting consumers to pull forward vehicle purchases and shifting demand toward domestics, which benefit from greater US production and, likely, the Trump administration’s “Made in America” policies. In contrast, many import brands faced supply constraints, higher costs and slower sales, though some OEMs absorbed a portion of tariff-related costs to help protect dealership profitability. These dynamics directly influenced Kerrigan Advisors’ adjustments to blue sky multiples and outlooks in this quarter’s report.
Meanwhile, industry earnings in the first half were more than twice pre-pandemic levels, supported by higher new vehicle sales, resilient vehicle gross margins, rebounding used vehicle prices and growth in fixed operations. Average public dealership earnings rose to $2.2 million, up 13% from the first half of 2024, while new sales increased 3.2% on robust consumer demand for pre-tariff vehicles, sustaining strong new vehicle gross profit margins.
Notably, the US public dealer groups’ acquisition activity remains high in 2025, on pace for the second-best year since 2021, driven by several transactions including Sonic Automotive’s acquisition of Kerrigan Advisors’ client US Auto Trust, and Asbury Automotive Group’s purchase of The Herb Chambers Companies. Public acquirers are well-capitalized with over $8 billion in total capital and continue to leverage their scale to compete aggressively for high-value dealerships.
“While demand for top franchises remains intense, we expect tariffs and facility requirements to contribute to greater variation in valuations for the remainder of the year,” continued Kerrigan, who also expects buyers to be selective, targeting franchises with image compliant real estate, in high growth locations and representing OEMs who are willing and able to absorb a meaningful share of tariff costs.
Rising Blue Sky Values Reflect Supply-Demand Imbalance
The 2025 buy/sell market is seeing more buyers than sellers, especially in high-demand locations and for top franchises. Many owners are reluctant to sell based on 2024’s lower earnings, while buyers are eager to acquire ahead of projected profit growth. This supply-demand imbalance drove the Kerrigan Blue Sky Index up 2.9% in the second quarter of 2025 to 175, from 170 in the last two quarters. Average dealership values are now 75% above pre-pandemic levels, though still 17% below their 2022 peak, with performance varying widely by franchise.
Second Quarter 2025 Buy/Sell Trends
For the second quarter of 2025, Kerrigan Advisors identified the following three trends that the firm expects will impact the buy/sell market in 2025:
Local Consolidation by Private Dealers Drives 2025 Buy/Sell Activity
While auto retail national consolidation remains a longer-term prospect, Kerrigan Advisors’ analysis confirms consolidation is advancing on the local level. This is particularly true in top markets and for leading franchises. Top brands are increasingly concentrated among a small number of dominant regional operators. For example, of the top 10 fastest growing US metros, 57% of Toyota dealerships are owned by the largest consolidators; and, in Raleigh and Tampa, all the Toyota dealerships are in the hands of Top 150 Dealership Groups.
This push for local expansion is driving a surge in tuck-in acquisitions, with an estimated 65% of buyers in the first half of the year expanding within their existing footprints.
Local and regional consolidation is laying the groundwork for future roll-ups, particularly in major metro areas. For example, the Washington-Baltimore metro has seen public ownership more than double, driven in large part by the sale of Kerrigan Advisors’ clients, including Koons Automotive (20 dealerships), Priority 1 (9), RRR Automotive (5) and Sterling Motorcars (2).
Nullification of CARB EV Mandate Waiver Spurs Increased Buy/Sell Activity in CARB States
The nullification of the CARB electric vehicle mandate is also having a positive impact on buy/sell activity in CARB states where, in the first half of 2025, they represented 34% of all dealership transactions, up from 23% in 2024 – a 48% increase in market share. This increased demand has eliminated the blue sky discounts recently applied to CARB state franchise, which has been replaced by heightened competition, particularly in high-density markets such as California and New England. Recent transactions, including US Auto Trust’s sale to Sonic in California on June 30th, and the Herb Chambers sale to Asbury in Massachusetts on July 21st, exemplify the renewed appetite.
“With the CARB EV mandate off the table, buyer interest in the 13 previously affected CARB states has shifted dramatically,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “We’re seeing blue sky values improve and deal activity pick up in these markets, especially in high density metros. This momentum is likely to bring more sellers to market in these states in the coming quarters.”
Buyers Significantly Discount Franchises That Require New Facilities
Buyers are applying substantial discounts to blue sky values for franchises facing high-cost facility investments, particularly when projected returns are limited by constrained vehicle production as in the case of Porsche. OEM facility upgrade requirements remain a major factor in buy/sell negotiations where many buyers either avoid acquisitions where the dealership requires an image upgrade or are applying a significant discount to the blue sky multiple in compensation for the economic hazards associated with construction.
“Today’s economic uncertainty associated with the Trump administration’s current tariff policy, coupled with the existential threat of China’s global influence on the auto industry, is impacting buyers’ willingness to take on major long-term real estate projects in conjunction with dealership acquisitions,” said Ryan Kerrigan.
Blue Sky Multiple and Outlook Adjustments Shaped by Tariff Exposure
Tariff exposure is increasingly shaping franchise valuations. Brands with a strong domestic manufacturing base or the ability to absorb added costs are generally faring better, while those heavily reliant on imports are seeing reduced multiples and weaker outlooks.
For the second quarter of 2025, Kerrigan Advisors made five adjustments to its blue sky multiples and four changes to its multiple outlooks in this report.
Multiples Increased for Ford and Buick GMC
In the non-luxury segment, Kerrigan Advisors increased Ford’s low-end multiple to 3.5 from 3.25, reflecting continued sales growth, a strong domestic manufacturing base and improving dealer relations. Although the brand remains challenged by its reliance on tariffed import parts, anticipated resolutions to tariff policy with Canada and Mexico are expected to reduce this exposure in the near term.
Buick GMC’s low-end multiple also increased, to 3.0 from 2.5, driven by robust demand for American-made pickup trucks and GMC’s status as one of the least tariff-impacted domestic franchises. GMC posted the highest sales growth in the non-luxury segment, while GM as a whole achieved its best first half sales performance in seven years, up 12%.
Multiples Reduced for Volkswagen, Audi and Volvo
Volkswagen and Audi, both significantly exposed to US tariffs, reported the largest sales declines in their segments in the first half, 12.8% for VW and 11.8% for Audi. This, alongside inventory oversupply, eroding earnings, and skepticism about a near-term catalyst for a recovery, resulted in VW’s high-end multiple being reduced to 3.25 and Audi’s low-end to 6.0.
Kerrigan Advisors also reduced Volvo’s blue sky multiples to 3.0 on the high-end and 2.5 on the low-end, due to lower buyer demand. Owned by China’s Geely Holdings, Volvo is one of the most exposed automakers to rising tariffs, with the majority of its vehicles produced outside the US.
Outlook Changes to Ford, CDJR, Mazda and Porsche
Kerrigan Advisors raised Ford’s outlook from steady to positive and CDJR’s from negative to steady, with both positioned to benefit from the Trump Administration’s final tariff policies given their substantial domestic manufacturing capabilities. CDJR’s weaker financial condition, however, underscored by a $2.7 billion second quarter loss, prevented an upgrade to positive.
Kerrigan Advisors also reduced the multiple outlooks for Mazda and Porsche this quarter from positive to steady. With almost no US production, both companies are heavily exposed to US tariffs. Mazda’s outlook was reduced from positive to steady due to its lack of US production, weak balance sheet, high inventory days’ supply and limited capacity to offset a 15% tariff. Porsche’s outlook was reduced from positive to steady, as buyers weigh the high cost of the Generation 5 facilities against the brand’s constrained production, which limits the ability to recoup the investment and keeps many non-compliant Porsche franchises trading at the low end of Kerrigan’s published blue sky multiple range.
“Tariff policy is starting to create winners and losers at the franchise level,” said Erin Kerrigan, Managing Director of Kerrigan Advisors. “Buyers and sellers are closely watching which OEMs can absorb added costs or adjust their strategies, and which are more exposed. These dynamics are showing up directly in blue sky multiples and will continue to shape valuations in the quarters ahead.”
Highlights from the Second Quarter 2025 Blue Sky Report® by Kerrigan Advisors include:
The Blue Sky Report®, published by Kerrigan Advisors, is the auto retail industry's most comprehensive and authoritative quarterly report on dealership M&A activity, as well as franchise values. The quarterly report, received by over 13,000 industry recipients in 35 countries, includes analysis of all dealership transaction activity for the year, and lays out the high, average and low blue sky multiples for each franchise in the luxury and non-luxury segments. For more details and to preview the report, click here. To sign up to receive the quarterly report, click here.
Kerrigan Advisors also releases monthly The Kerrigan Index™ composed 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.
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 300 dealerships generating more than $9.5 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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