Buy/sell transactions surged 10% YoY in 2024, with 697 franchises sold—highest since 2021; buyer confidence in valuations grew as earnings normalized; Blue Sky multiples strongest among most trusted franchises

Incline Village, NV – March 17, 2025 – The auto dealership buy/sell market delivered another record year of buy/sell activity with 438 completed dealership transactions, up 10% compared to 2023, according to the just-released 2024 Annual Blue Sky Report^® by Kerrigan Advisors. For the year, 697 franchises were sold, the highest number since 2021 and a 2.5% increase from 2023. The strength of the buy/sell market in 2024 was largely driven by growing industry confidence in the future of auto retail sales and profitability.

According to the 2024 Annual Blue Sky Report, fourth quarter 2024 automotive sales remained strong, signaling a market with substantial growth potential, and positioning the industry to surpass the prior annual vehicle sales peak of 17.55 million set in 2016, providing trade policies remain favorable. With more than a quarter of a trillion dollars in pre-tax dealership earnings accumulated since the pandemic - much of it sitting idle on balance sheets - Kerrigan Advisors expects the consolidation trend to persist in 2025,

“With interest rates lower, inflation moderating, and vehicle affordability improving, new vehicle sales saw a significant uptick throughout the year, further boosting buyer confidence,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “This confidence grew even stronger post-election, as dealers experienced a sharp rebound in new vehicle sales—clear evidence of pent-up consumer demand after years of constrained supply.”

Contributing to the strength of the buy/sell market is the fact that many dealers view 2024’s lower earnings as the market’s trough, from which future growth can, at last, be projected—an earnings baseline that remains 78% higher than pre-pandemic levels, even when adjusted for inflation. If gross profit per new vehicle retailed stabilizes at 2024 averages, and new vehicle volumes return to historical rates, industry earnings should normalize well above pre-pandemic levels, resulting in more than $40 billion of potential gross profit, projects The Blue Sky Report®. “Given this backdrop, buyers are factoring this growth potential into their dealership acquisitions, driving stronger motivation and greater conviction in blue sky valuations,” continued Kerrigan.

The report also reveals that franchise diversification was critical to a dealership group’s success in 2024 as the auto retail market bifurcated into “have” and “have not” franchises. Strong franchises thrived on low inventories and sustained high gross profit margins, while weaker franchises struggled with ballooning inventories, rising floorplan costs, and falling gross profits. This divergence created a marketplace of winners and losers, clearly reflected in days’ supply of vehicles. For instance, Lexus, Toyota, BMW and Honda who have amongst the highest valuations in the industry, maintained the lowest days’ supply—well below the industry average—whereas Lincoln, Nissan and CDJR, have amongst the highest days’ supply and lowest valuations.

 “Not surprisingly, valuations for underperforming/weaker franchises fell sharply in 2024 as dealer confidence in those OEMs declined,” continued Kerrigan. “Some dealers with struggling franchises faced financial distress for the first time since the Great Recession, leading to an increase in distressed sales and deeply discounted valuations compared to their pandemic highs. With the average dealer owning fewer than three stores, the impact of a weak franchise became harder to absorb.”

This market shift fueled record franchise divestitures, particularly among underperforming brands like CDJR, Nissan and Infiniti. As multi-dealership deals declined year over year, from 32% in 2023 to just 22% of 2024’s buy/sell activity - the lowest share on record – single-point transactions surged and the number of franchises sold per transaction declined to 1.59, a 7% drop from 2023.  That said, multi-dealership transactions remained above pre-pandemic levels with 97 completed deals, the third highest on record and a 67% increase over the pre-pandemic average of 58.

Market Consolidation Shifts to Privates, the South Surges and Blue Sky Values are Historically High

The Blue Sky Report® underscores the continuation of the consolidation trend in 2024, with the largest private dealerships in the industry (Automotive News’ Top 150 Dealership Groups) growing at the fastest rates, even as the US public dealer groups remain net sellers of dealerships. In 2024, the Top 150 accounted for more than 30% of industry revenue, representing 28% of the franchises acquired, the highest level on record.  These companies also continued to grow revenue per rooftop, which now exceeds the NADA average by 18% or $13.1 million.  

The Southern United States continued to be a stand-out in the regional consolidation trend in 2024 as buyer demand for its high growth, business-friendly markets surged to a new record, now representing the majority of transactions with a buy/sell market share of 51%, a 20% year-over-year increase.

Although they averaged 19% below their 2022 peak, overall, blue sky values remained historically high in 2024, supported by an active and liquid buy/sell market. “Many dealers see 2024 as a valuation inflection point, with blue sky values expected to rebound in 2025, alongside a recovery in industry earnings, and the public markets reflect this outlook,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors.  “As we look ahead to 2025, strong buyer demand and an improving earnings environment suggest the buy/sell market will remain highly active.”

The 2024 Kerrigan Dealer Survey confirms this trend, showing a 258% increase in dealers seeking to sell a dealership compared to 2022, a 16% rise in those looking to grow, and a 12% decline in those planning for no change.

“With valuations poised to rise, we expect another robust year for dealership transactions. As dealers and their families plan for 2025 and beyond, the choice between growth and exit will be front and center—while inertia appears to be a less viable strategy in the evolving market,” continued Ryan Kerrigan.

2025 Buy/Sell Trends

In the 2024 Annual Blue Sky Report, Kerrigan Advisors identified the following three important trends that are expected to meaningfully impact the auto retail market in 2025.

• Dealership Real Estate Values Remain High, Buoying Dealership Enterprise Values
• OEMs Exercise Their Right of First Refusal at an Increasing Rate
• Chinese OEMs’ Growing Global Market Share Could Eventually Impact US Blue Sky Values

Dealership Real Estate

Dealership real estate values are having a profound impact on the buy/sell landscape in 2025: strong retail sales and elevated construction costs are sustaining high dealership property valuations as demand outpaces supply. Kerrigan Advisors estimates that, since 2014, dealership real estate values have risen 51% to $13.9 million on average, increasing real estate’s share of total transaction values.

“While blue sky values have declined about 19% from their 2022 peak, rising real estate valuations have offset this drop, keeping total dealership enterprise values near record levels in 2024,” said Ryan Kerrigan. “This trend highlights the critical role of dealership real estate in a dealer’s decision to sell and their total after-tax proceeds.”

OEM ROFRs

OEMs record number of right of first refusals (ROFRs) in 2024 continues a trend that began in 2022 when blue sky values peaked. ROFR activity historically correlates with buy/sell volume—higher transaction levels boost OEM confidence in securing alternative buyers, prompting more frequent ROFR use. As ROFRs rise, dealer trust in OEMs is eroding. The 2024 Kerrigan Dealer Survey found that 25% of respondents reported “no trust” in their OEM, up 19% from 2023, while moderate and high trust levels declined. This growing disconnect highlights rising friction in the franchise system, as consolidation accelerates and OEMs exert greater control over dealership ownership and network composition.

Growing Chinese Global Market Share

China is redefining the global automotive landscape. It surpassed the US as the world’s largest auto market in 2009 by 3.1 million in annual light vehicle sales and has maintained the top position in vehicle sales ever since, with the variance growing to 13.9 million in 2024.

“Legacy OEMs are feeling the financial impact of losing market share in the world’s largest auto market. Volkswagen, General Motors, Nissan, BMW, and Mercedes-Benz—once reliant on China for 20% to 40% of global sales—are facing accelerating declines in 2024, hitting earnings hard,” said Erin Kerrigan, Highlighting the severity of the shifting competitive landscape, Kerrigan noted that General Motors took a $5 billion restructuring charge in Q4 2024 due to its weakening Chinese business—equivalent to ~70% of its 2024 net income.

Toyota, Kia, and Lexus Multiples Increased

“As OEM-dealer relations continue to evolve, trust will play a defining role in shaping franchise valuations and determining which brands retain their competitive edge in an increasingly complex automotive landscape,” said Erin Kerrigan.

“In fact, we uncovered a strong correlation between a franchise’s dealer trust level and its blue sky multiple. At one end, CDJR has a near-zero trust score and a blue sky multiple just above 3x, while Toyota, with a 83% trust score, has a blue sky multiple of approximately 8x. Franchises that inspire confidence have predictable earnings, making them highly desirable acquisitions for buyers, driving up price. Conversely, franchises plagued by distrust inject uncertainty into financial projections and increase perceived investment risk, resulting in lower valuations.”

For the fourth quarter of 2024, Kerrigan Advisors increased the multiple for Toyota to 7.0x on the low-end and 8.0x on the high-end, as the brand continues to reign supreme in the buy/sell market. Toyota’s strong franchise business model, high level of dealer trust and high franchise profitability, from strong consumer demand and exceptional inventory management, is driving ever higher blue sky multiples.    

Kerrigan Advisors also increased the multiple for Kia to a range of 4.5x to 5.5x due to increased demand for the franchise. This high demand results from its sustainably high dealership profitability post-pandemic and growing buyer demand (nearly a quarter of dealers surveyed in the 2024 Kerrigan Dealer Survey seek to add Kia, ranking 4^th amongst all franchises). Kia also had the fourth highest trust level amongst non-luxury franchises in the 2024 Kerrigan Dealer Survey.

In the luxury segment, Kerrigan Advisors increased the high-end of Lexus’ blue sky multiple from 8.5x to 10x this quarter as demand for Lexus franchises continues and dealer relations strengthen, resulting in high trust with the OEM. Lexus commands the highest blue sky multiple of any franchise in the industry due to the scarcity of points available for purchase, coupled with the highest buyer demand in the luxury segment. 70% of dealers surveyed by Kerrigan Advisors have a high level of trust in Lexus due to its superior business model (high UIO count, high sales per franchise, superior gross profits).

CDJR, Nissan, Audi and Volvo Multiples Decreased, Volvo’s Outlook Reduced

In the fourth quarter, Kerrigan Advisors downgraded CJDR and Nissan. Both non-luxury franchises’ blue sky multiples have been reduced to 2.5x to 3.25x due to very weak franchise financial performance in 2024, a lack of trust in their OEMs and high buyer avoidance. Nissan’s economic future remains in question; however, the right business partner/merger could strategically launch the company into a prosperous and more predictable future, which would have a meaningful impact on future blue sky values. 

Kerrigan Advisors also downgraded blue sky multiples for luxury franchises Audi and Volvo. Audi’s blue sky multiple range was reduced by 0.5 on the high end and 0.25 on the low end this quarter, to 6.5x – 7.0x as it experienced the steepest sales decline in the luxury segment in 2024. Likewise, Kerrigan Advisors reduced Volvo’s blue sky multiple on the high end from 4.0 to 3.5, and the brand’s outlook was changed to negative given Volvo’s rising inventories and declining dealer profitability. Volvo sales declined in 2024, with the OEM’s significant investment in EVs calling into question the franchise’s future product pipeline and its suitability to the US consumer.  

 “In the face of potential import tariffs if the Trump administration proceeds with its plans, 2025 blue sky multiple expectations face some uncertainty. Tariffs on all auto imports, including parts from Mexico and Canada, will drive up vehicle costs, impacting OEMs, dealers, and consumers. For dealers, higher costs, supply chain disruptions and reduced affordability would likely lead to margin compression. While the impact will vary by franchise, most dealers expect the risk to either not materialize or to be mitigated by OEMs who may absorb a significant portion of the cost,” concluded Ryan Kerrigan.

Highlights from the 2024 Annual Blue Sky Report® by Kerrigan Advisors include:

• 438 dealership transactions were completed for the full year 2024, a 10% increase over 2023’s previous record high. There were 234 transactions in the second half of 2024 alone – close to 2021’s record 239.
• 697 franchises were sold in 2024, the second highest number on record.
• The number of multi-dealership transactions declined to 97 transactions representing 22% of all transactions completed, compared to 32% in 2023 and 126 transactions. This still represented the third highest number of multi-dealership transactions on record.
• The domestics represented 41% of the buy/sell market in 2024, losing 7% share to the import luxury market and 6% share to the import non-luxury market.
• In 2024, the US public dealer groups were net sellers of dealership, divesting a record 47 franchises, 18 more than they acquired, representing a 0.6 acquisition-to-divestiture ratio – the lowest ratio since 2015.
• The US public dealer groups ended the year at a blue sky multiple 7.7x below the top luxury average multiple of ~8.5x, but above the top non-luxury average of ~6.5x, improving acquisition prospects and making them more accretive to EPS.
• 51% of the acquisitions in 2024 were in the South, a 20% increase from 2023. Both the Midwest and Northeast regions saw their share shrink to 23% and 11%, respectively.
• 30% of the US public dealer groups total invested capital went to international and other acquisitions —the highest share recorded. Capital invested toward US acquisitions fell to 22% from 37% in 2023.

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 12,000 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.

About Kerrigan Advisors

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®, which 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 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 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.

Kerrigan Advisors Media Contact:
Melanie Webber (melanie@mwebbcom.com), mWEBB Communications, 949-307-1723