The auto dealership buy/sell market maintained its record-pace through the third quarter of 2025, with 445 transactions completed in the trailing twelve months ending September 2025, representing an 11.4% compound annual growth rate since 2019, according to the just-released Third Quarter 2025 Blue Sky Report® by Kerrigan Advisors. With continued strength in dealership earnings and improved affordability driving solid new vehicle demand, blue sky values rose in the third quarter, supported by continued buyer demand for high-quality franchises and the pursuit of regional scale.
While tariffs had little measurable impact on the buy/sell market, the cost-saving promise of AI is building confidence. At the same time, the financial resilience of the affluent consumer is drawing public dealer groups toward luxury and ultra-luxury brands, contributing to elevated buy/sell activity within those segments and reinforcing Kerrigan Advisors’ prediction of another record year.
“Dealers entered the third quarter with strong conviction,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “The combination of rebounding earnings, improved consumer affordability, the industry’s ongoing shift toward regional scale and the emergence of AI-enabled operational efficiencies is reinforcing buyer demand across most franchise segments. We continue to see more buyers than sellers in high-growth markets, and the competitive pressure is supporting blue sky values as demonstrated by the Kerrigan Blue Sky Index which rose again in the third quarter.”
Dealers continued to prioritize local expansion in 2025, with 65% of franchises acquired by in-market buyers, reinforcing the industry’s trend toward regional consolidation. This trend was most pronounced in the South, accounting for a record 56% of the buy/sell activity through the third quarter. The report notes that smaller private groups increased their share of total acquisitions as average transaction size declined, further contributing to the rise in single-point transactions as more dealers jettison their under-performing franchises, doubling down on high-performers. These moves reflect the report’s finding that more dealers are building scaled regional platforms to manage rising operational complexity and support AI-enabled efficiency gains.
Additionally, public dealer groups increased their total capital available for investment by nearly $900 million over the last 12 months to $8.27 billion, which is expected to support continued expansion and the closing of additional acquisitions in the fourth quarter. The public groups’ tremendous access to capital coupled with their rising blue sky multiples (up to 6.4x for the group) resulted in 53% of their capital being allocated to US dealership acquisitions through the third quarter, more than double 2024’s level when international and non-US dealership investments captured the greatest share of spend.
According to the report, improved vehicle affordability – now 18% better than its December 2022 peak – along with rising OEM incentive spending and a pull-forward of EV demand ahead of the tax credit sunset, helped lift new vehicle sales back above the 16 million SAAR in the third quarter of 2025. OEMs’ production discipline kept inventory near 50 days’ supply according to Wards, well below pre-pandemic levels, sustaining elevated new vehicle margins. Fixed operations also remained a key profit driver, with average dealership service and parts gross profit rising to $4.91 million, up 48% since 2020.
