China is rapidly redefining the global automotive landscape, and potentially the US market.
China is the largest auto retail market in the world, surpassing the US in 2009 (see Chart 1). Now, Chinese OEMs are on the verge of becoming the world’s largest automakers. Today, China represents 40% of global auto production relative to the US’s 10% share. The country leverages its superior cost efficiencies, government-backed initiatives and aggressive expansion strategies to accelerate its global market share gains.
Today, 64% of vehicles sold in China (a market now double the size of the US) are manufactured and sold by domestic Chinese brands, up from 36% in 2020. By contrast, legacy automakers have seen their market share decline to just 36% (see Chart 2). The rapid ascent of China’s domestic brands in China, at the expense of imports, signals a potential reshuffling of the global auto industry, with Chinese manufacturers poised to extend their market dominance beyond their home market.
The financial ramifications to legacy OEMs of lost market share in the world’s largest auto market are becoming increasingly apparent. 70% of OEM executives surveyed by Kerrigan Advisors now have concerns about the financial impact of Chinese OEMs’ rising global market share (see Chart 3). This is perhaps not surprising when considering how the automakers that suffered the most significant declines in Chinese market share had historically relied on China for a meaningful percentage of their global sales (see Chart 4).
OEMs’ concern about the financial impact of Chinese OEMs are becoming a reality as their earnings are now being negatively impacted by the lost sales. One of the most striking examples is General Motors, which recorded a $5 billion restructuring charge in the fourth quarter of 2024 due to the deterioration of its Chinese business. To put this into perspective, GM’s China charge represents 70% of the company’s 2024 net income, underscoring the financial gravity of the shifting competitive landscape.
As legacy OEMs experience the financial fallout from their shrinking China presence, they have concerns about Chinese OEMs entering the lucrative US market. The US is the only major auto retail market in the world where Chinese OEMs are absent. This makes the US a highly attractive auto retail market for legacy OEMs. However, 76% of US auto executives surveyed by Kerrigan Advisors expect Chinese automakers to eventually enter the US market (see Chart 5), indicating the barrier to entry may be short lived.
While the US has successfully shielded its auto retail market from Chinese imports for now, the global rise of Chinese OEMs – and the potential for their future entry into the US – will inevitably impact legacy automakers’ US strategy, operations and their associated blue sky values. Blue sky represents the intangible value of a franchise, driven by an OEM’s ability to sustain a profitable dealer network with compelling, innovative products. When an automaker loses global market share and suffers the financial implications of that loss, its blue sky value often declines.
Whether Chinese vehicles enter the US market directly or not, their growing dominance in the global auto industry will have financial consequences for US auto retailers. As the competitive landscape continues to shift, US dealers should closely monitor the financial health and strategic global positioning of their franchise OEMs, ensuring they align with brands capable of sustained investment and long-term viability in an evolving global marketplace. Fully insulating the US auto market and blue sky values from the impact of the Chinese auto industry likely has an expiration date.
Erin Kerrigan is Managing Director of Kerrigan Advisors, which she founded in 2014. Kerrigan Advisors is the leading boutique investment bank serving auto retail, the largest retail industry in the US. Since its founding, Kerrigan Advisors has sold over 300 dealerships representing over $9 billion in client proceeds, including the third largest transaction in the industry’s history – the sale of Jim Koons Automotive Companies in 2023 to Asbury Automotive for $1.5 billion.
Prior to founding Kerrigan Advisors, Erin headed Presidio Automotive, another boutique investment bank dedicated to auto retail based in San Francisco. Prior to Presidio, she was a Senior Vice President at iStar Financial (NYSE: SFI), a multi-billion dollar publicly-traded REIT where she led transaction origination. Early in her career, Erin was dealer operator of her family’s dealership, which she sold in 2006. She began her post-graduate career as an investment banker for Piper Jaffray in Menlo Park, California.
Erin is a recognized industry expert on dealership M&A, valuation, real estate and private equity, and is frequently quoted by The Wall Street Journal, The Economist, CNBC and Automotive News. In 2018, she was named a Women of Influence by Automotive News. Erin is a recurring speaker at leading auto retail events and conferences held by JD Power, National Auto Dealers Association (NADA), American International Auto Dealers Association (AIADA), American Institute of Certified Public Accountants (AICPA), National Association of Dealer Counsel (NADC) as well as numerous state dealer associations. She has also been a keynote speaker for events hosted by Toyota Motor North America, American Honda Motor Company, Audi of America, Bank of America, Wells Fargo, US Trust and Truist. Erin is the author of The Blue Sky Report®, the industry’s leading M&A report, which is distributed to 11,000 industry participants in 35 countries and co-authored NADA’s Guide to Buying and Selling Auto Dealerships.
Erin earned her undergraduate degree from Northwestern University and her MBA from The UCLA Anderson School of Management. She resides in Incline Village, Nevada with her husband and partner, Ryan Kerrigan, and their three children, two of whom are currently attending the University of Notre Dame. Erin is a member of the Young Presidents Organization and serves on the University of Notre Dame’s Cabinet For Good Campaign and Mendoza College of Business Advisory Council, Northwestern University’s Council of 100 and the board of The League to Save Lake Tahoe.
Erin Kerrigan is a Registered Representative of BA Securities, LLC. Member FINRA SIPC.
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 $10 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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