US auto dealer sentiment reached an important inflection point in 2025: for the first time in four years, more dealers expect profits and valuations to increase rather than decline, according to the 2025 Kerrigan Dealer Survey.
The survey, which queried over 525 auto dealers, assesses their sentiment on the future value of their franchises, expectation for earnings, as well as the impact of tariffs and the use of AI.
Twenty-four% of dealers expect their values to increase, 59% expect them to remain stable and only 16% anticipate a decline, a significant improvement from last year when 33% projected a decline. These positive results indicate a rising optimism in auto retail that is projected to drive an increase in acquisition activity in 2026.
The survey also found that dealer profit expectations improved sharply, with double the number of dealers, 32%, projecting higher earnings in 2026 than in 2025. This is a significant turnaround from 2024’s pessimism, when 43% expected earnings to decline: only 20% expect a decline in 2026.
“Dealer optimism is rebounding markedly as we enter 2026,” said Erin Kerrigan, founder and managing director of Kerrigan Advisors. “These positive expectations for auto retail valuations and earnings are consistent with the improvements Kerrigan Advisors is witnessing in dealer sentiment, particularly as consumer demand, rather than government regulations, drive new vehicle sales, and the industry gains greater clarity on US tariff policy.”
Kerrigan also noted that this inflection point is consistent with Kerrigan Advisors’ Blue Sky Reports, which marked 2024 as the trough for dealership profits and valuations.
Improving dealer sentiment is translating into more dealers looking to expand their groups by acquiring at least one dealership in 2026. According to the survey, 32% of dealers say they plan to add one dealership over the next 12 months, up six percentage points from 2022’s lows.
The survey revealed that tariffs had a relatively limited impact on dealers, with 43% reporting that tariffs had no impact on their business. While 16% of dealers said tariffs have increased their interest in acquisitions, only 2% reported that tariffs are prompting them to sell.
