Auto dealers are maintaining a positive outlook on the value of their businesses for 2025, despite an increasingly mixed sentiment regarding profits and franchise performance, according to the newly released 2024 Kerrigan Dealer Survey.
The survey, which collected responses from more than 635 auto dealers, revealed 51% of respondents believe dealership valuations will remain elevated, with an additional 17% anticipating further increases.
This optimism comes even as dealership profits begin to stabilize after the record highs of recent years.
“Despite a moderation in profits, auto dealer sentiment remains upbeat on 2025’s valuations, directly impacting acquisition activity in the coming year,” said Erin Kerrigan, founder and managing director of Kerrigan Advisors.
EVs Pose Profitability Concerns
One of the most striking findings of the survey is the concern surrounding new electric vehicle (EV) sales. A significant 77% of dealers expect EV sales to negatively affect profitability in 2025, citing challenges such as higher costs and an evolving consumer base.
In contrast, hybrid vehicle sales and parts and service operations are seen as key growth drivers, with 77% and 75% of respondents, respectively, expecting these areas to boost earnings.
Franchise Trust and Valuation Trends
Dealer sentiment toward specific franchises also varied widely. Toyota and Lexus emerged as the most trusted and sought-after franchises, with 83% and 76% of respondents expressing high trust in the brands.
“Toyota and Lexus are by far the most requested brands in our Buyer Database and in this year’s survey,” noted Ryan Kerrigan, managing director of Kerrigan Advisors.
These brands’ strategies in inventory management, EV development and network size are seen as particularly attractive.
Conversely, Stellantis brands like Chrysler, Dodge, Jeep and Ram (CDJR) and Nissan saw significant trust declines, with 72% of respondents indicating no trust in CDJR -- a record-high figure for the survey. More than 64% of respondents also expect CDJR, Infiniti, Lincoln and Nissan franchises to decrease in value over the next 12 months.
Acquisition and Consolidation on the Rise
Acquisition trends point to continued consolidation in the industry. Nearly half (49%) of dealers surveyed plan to add one or more dealerships to their portfolio in 2025, up slightly from 47% in 2024. Meanwhile, the percentage of dealers planning to sell has risen to 7%, reflecting a small but growing segment concerned about declining profits.
“The industry’s view that scale will be crucial in the evolving auto retail landscape is driving enterprises to either expand or sell as consolidation continues,” Erin Kerrigan said.
Methodology
The findings are based on anonymous survey responses from franchised auto dealers in Kerrigan Advisors’ proprietary dealer database. Data was collected between June and November 2024 and analyzed in conjunction with the issuance of The Blue Sky Report.
