The Dealership Buy/Sell Market Surges in 2025
In an unexpected turn amid a year filled with challenges for auto retailers, the dealership buy/sell market reached new heights in 2025. A mix of strategic acquisitions and strong financial health has paved the way for impressive growth, raising essential questions about the future of auto retail.
Unprecedented Transaction Levels Fuel Optimism
The 2025 Blue Sky Report® by Kerrigan Advisors revealed that an all-time high of 458 transactions took place across the United States in the past year. This figure translates to the sale of 688 franchises, marking a 5% increase from the previous year. What does this mean for the industry? The surge signals not only a robust appetite for acquisition but also a shift toward consolidation in the rapidly evolving automotive landscape.
Market Mechanics: Strategic and Selective Purchases
Analyzing the momentum, it's clear that public dealerships are leading the charge. In 2025 alone, nearly half of their capital, amounting to about $4.4 billion, was dedicated to acquiring dealerships. However, the nature of these acquisitions has transformed. The average number of franchises sold per transaction dipped to an unprecedented 1.5, highlighting a strategic shift from broad-based opportunistic buying to focused expansions in markets where acquirers already operate.
Erin Kerrigan, the Founder and Managing Director of Kerrigan Advisors, stated, “While buy/sell activity was strong, the valuation environment is increasingly bifurcated. High-performing franchises are commanding price premiums, while those that are lower-performing or smaller face more limited interest.” This trend reinforces the notion that selectivity is driving future market transactions, with consolidators prioritizing geographic density and large-volume dealerships.
Financial Performance: The Underlying Strength
Significantly, sustained profitability underpins this aggressive market behavior. Despite challenges such as diminishing pandemic-era margins, the average pre-tax earnings for public dealerships stood steady at about $4.1 million per location, reflecting a robust 3.6% net-to-sales margin. These figures are an impressive 87% above the pre-pandemic averages, engendering confidence among buyers that these earnings benchmarks won't merely serve as temporary peaks but rather sustainable floors.
New Vehicle Sales: A Positive Ascendance
The data reveals further optimism; retail light vehicle sales climbed to 14.5 million units in 2025, eclipsing 2019 figures and generating total industry revenue at new all-time highs. The average gross profit per new vehicle also showcased a significant rise, with a normalized average of $3,383—63% higher than 2019 levels. This performance illustrates a dynamic recovery in the new vehicle sector, lending more credibility to the valuation environment within the overall auto market.
Shifting Dynamics with Fixed Operations
Beyond the sales floor, the significance of fixed operations cannot go understated. As vehicle service lanes and used inventory stabilize earnings, dealers are being sustained by a growing reliance on them. The average gross profit from fixed operations surpassed $5 million per dealership in 2025, driven partly by an aging vehicle fleet in the U.S. and rising consumer demand for vehicle maintenance.
Looking Ahead: Opportunities and Digital Disruption
The findings from the Kerrigan Blue Sky Index indicate a closing average of 176, 76% above levels from 2019. Some brands—like Honda—have seen notable multiple increases, affirming their desirability in the current market. However, notable competitors such as Carvana are introducing significant disruption through technology-driven acquisition and lower operational costs, thus challenging traditional dealer operating benchmarks.
As we navigate through 2026, it’s vital for dealership owners to position themselves strategically not just to weather potential storm clouds but to capitalize on emerging trends as they redefine the automotive retail landscape. The future is increasingly shaped by technology and strategic foresight as dealers look to blend traditional strengths with new operational efficiencies.
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