Kerrigan Advisors’ annual OEM survey is designed to gauge OEM executives’ perspectives on the franchise system, dealership financial performance, electric vehicle (EV) sales and China’s growing influence on US automotive retail. This one-of-a-kind survey provides a critical window into the perspectives of OEM executives whose views are not often shared publicly in the industry.
Kerrigan Advisors’ annual OEM survey is designed to gauge OEM executives’ perspectives on the franchise system, dealership financial performance, electric vehicle (EV) sales and China’s growing influence on US automotive retail. This one-of-a-kind survey provides a critical window into the perspectives of OEM executives whose views are not often shared publicly in the industry.
The results of the third annual Kerrigan OEM Survey demonstrate that OEM executives have a largely positive outlook regarding dealership valuations and profitability in 2025, though this data was compiled before the Trump Administration’s tariffs went into effect and thus do not take the tariff’s impact into account. The survey also makes clear that the dealer will be at the forefront of the OEM’s customer-facing relationship, which comes at the expense of OEMs more tightly managing their dealer networks. OEMs also project continued growth in the EV segment and expect Chinese OEMs, who dominate the EV segment globally, to enter the US market in the future.
Dealership Valuations, Sales and Profits
The results of our third annual OEM executive survey found that an overwhelming majority (78%) of respondents expect dealership blue sky values to remain the same or increase in 2025 and only 22% expect a decrease. Notably, these expectations are more positive than the results of the 2024 Kerrigan Dealer Survey, where 68% of the 635+ dealer respondents expected values to rise or stay the same in 2025.
Consistent with this positive outlook, 66% of OEM respondents expect dealership earnings to increase or stay the same in the near-term, a 20-percentage point improvement from 2024. These results were driven by a dramatic decline in the number of respondents who expect a decrease in earnings, down to 34% from 54% in 2024 and 69% in 2023. Once again, OEMs were more optimistic than dealers (43% of surveyed dealers expected a decline in dealership earnings in 2025).
Kerrigan Advisors also asked OEM executives about expectations for gross margins, new vehicle sales, and inventory levels over the next 12 months. Slightly more than half (52%) of OEM executives surveyed anticipate dealers’ gross margins to exceed pre-pandemic levels, with a total of 10% expecting grosses to normalize more than 25% higher than pre-pandemic averages.
An overwhelming majority (82%) of respondents expect new vehicle sales to be flat or rise in the next 12 months. That said, it is interesting to see a 10-percentage point increase in those that expect a decline in sales, particularly since this survey was completed before the Trump Administration’s tariff announcement on April 2nd. We also note an 8-percentage point decline in those who expect an increase in sales.
The more negative sentiment toward new vehicle sales may be driven by a rise in OEMs who project a 90+ days’ supply of inventory (10%), though we also saw an increase in those who expect a 30-60 days’ supply (27%, up five percentage points).
OEMs’ mixed sentiment on sales and inventory levels likely reflects the growing divergence between their individual retail performances, with certain OEMs experiencing strong sales growth and rightsized inventory levels, while others lose market share and have an oversupply of vehicles on dealers’ lots. Their generally more negative sentiment regarding sales and inventory levels, relative to their more positive view toward dealer profits and valuations, may also be an indication of the OEMs’ larger expected burden when tariffs settle out.
OEM and Dealer Relations
This year’s survey also queried OEM executives about their perspective on the franchise system. Notably, we observed a steep decline in OEMs’ plans for an agency model in the US, perhaps in response to the legal battles underway with Volkswagen’s Scout and Honda’s Afeela. The majority of OEMs surveyed (56%) do not expect the agency model to be introduced in the US and fewer affirmed the model’s employment in the future. That said, there was a slight increase (4 percentage points) in the number of respondents who are unsure (35%). The recent rollout of Hyundai’s Amazon program, an agency-like sales approach, could be driving some of this uncertainty.
Similarly, OEMs appear to accept that the dealer will play a major role in managing the customer relationship and data for the next five years, either alone (18%) or with the OEM (74%). Just 8% expect the OEM will be the exclusive owner of the customer relationship in the future, an 11-percentage point decline from 2024’s survey results.
While OEMs appear to have largely accepted the dealer’s leading role with the customer, more are seeking to minimize the number of dealers in their networks and are using their right of first refusal (“ROFR”) to do so. One third of OEM executives expect to have fewer dealers in their network in the next five years and 28% expect to ROFR more than 25% of their buy/sells. These results are consistent with Kerrigan Advisors’ 2024 Annual Blue Sky Report® in which we discuss the rising trend of OEMs exercising their ROFR.
Consistent with OEMs’ desire for increased control over their dealer networks, OEMs are also demanding more of their dealers as it relates to facility requirements. 25% project an increase in facility requirements over the next five years and 67% expect today’s already high standard will remain. Notably, just 8% assume a decrease in facility demands, a 14 percentage point decline from last year. Kerrigan Advisors observes that the rise in dealers deciding to sell in 2025 is in part due to the costs of OEM-required facility upgrades, which often require a long investment horizon to justify.
EV Transition & China’s Impact on the Global Auto Retail Market
Kerrigan Advisors also queried OEM executives regarding the electric vehicle (EV) transition in the US auto retail marketplace. Despite the Trump Administration’s plans to eliminate EV tax credits, OEMs still expect EV market share to rise in 2025, with a surprising 14% projecting EVs will end the year at greater than 21% of the market, a significant increase over 2024’s 10% share and the 7.5% market share at the end of Q1 2025.
Largely consistent with last year’s results, 80% of OEM executives see the EV transition playing out slower than originally planned. The biggest impediment OEMs report to fulfilling their original sales goals are a lack of charging infrastructure, high vehicle prices, low consumer demand, battery range, weather limitations and used EV resale concerns. It is notable that in this year’s survey 10% of OEM executives now feel the EV rollout is going faster than planned, more than double 2024’s results. This may be due to rising incentive spending on new EVs in an effort to reduce bloated supplies in dealers’ inventories.
For the first time, Kerrigan Advisors also queried OEM executives about China’s potential influence on the US auto retail market. 70% of OEM respondents have concerns about the financial impact of Chinese OEMs’ rising global market share. China now has more than 40% of the global automotive production capacity, relative to the US’s 10% share. Also, with the EV segment projected to grow in the US, legacy OEMs appear concerned about Chinese OEMs’ dominance in this sector (Chinese OEMs have greater than 75% global market share in EVs). This is of particular concern given that 76% of OEMs surveyed expect Chinese OEMs will enter the US market.
The results of the 2025 Kerrigan OEM Survey reveal a largely positive outlook for the franchise dealership model, with OEM executives expecting dealership valuations and profits to remain strong. The survey indicates growing acceptance of dealers’ leading role in customer relationships, even as OEMs plan to consolidate their networks and increase their facility requirements. While EV adoption is expected to rise, OEMs acknowledge a slower-than-anticipated transition and express increasing concern over China’s expanding influence in the global automotive market. Overall, OEMs remain confident in the franchise system’s critical role in a rapidly evolving US auto retail marketplace.
The data for The Kerrigan OEM Survey was gathered from Kerrigan Advisors’ annual survey of automotive OEM executives in conjunction with the issuance of The Blue Sky Report®. The survey is based on over 100 responses from OEM executives in Kerrigan Advisors’ proprietary database. Responses were collected from December 2024 to March 2025, before the Trump Administration implemented wide-ranging tariffs.
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