Buy/sell activity rose 21% year-over-year in the first quarter, even as industry earnings declined, according to Kerrigan Advisors’ First Quarter 2026 Blue Sky Report®; the US public dealer groups’ average spend per acquisition reached a record of nearly $200 million

The auto dealership buy/sell market set another record in the first quarter of 2026, with transactions rising 21% compared to the first quarter of 2025, according to the just-released First Quarter 2026 Blue Sky Report^® by Kerrigan Advisors. 478 transactions were completed through March 2026 on a trailing twelve-month basis, the highest level ever recorded in a twelve-month period, and 114% above the pre-pandemic five-year average. Even as average dealership earnings softened year-over-year, a resurgence in multi-dealership transactions and rising franchise valuations for the top brands bolstered the buy/sell market.

“As auto retail enters its sixth year of record-setting buy/sell activity, the accelerating pace of consolidation has become an industry staple,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “This quarter’s impressive performance illustrates a market operating on long-term conviction, rather than short-term earnings. Even with the quarter’s softer profitability performance, dealers and buyers alike see auto retail’s fundamentals as durable, and the most desirable franchises are commanding record prices. That is bringing more owners of these sought-after franchises to market, and we expect that momentum to define 2026’s dealership buy/sell market.”

One of the drivers of the rise in transaction activity in 2026 is the pickup in multi-dealership transactions, up 36% year-over-year, reaching 108 transactions on a trailing twelve-month basis. In addition, the Kerrigan Blue Sky Index rose to 178 in the first quarter of 2026, 78% above 2019 levels, with certain brands, including Toyota and Lexus, achieving record blue sky values during the quarter. These historically strong valuations for the highest-demand franchises continue to bring more sellers to market and significantly increased their share of buy/sell activity in 2026 compared to last year.

Record Valuations Bring Top Brands to Market

The US public dealer groups’ average acquisition purchase price-per-dealership rose to a record of nearly $200 million in the quarter, up over 250% from 2025, reflecting the premium buyers will pay for the highest-demand franchises. The quarter’s spending included Penske’s estimated $670 million purchase of Lexus of Orlando and Lexus of Winter Park in Central Florida, the most ever paid for two dealerships in the US. The publics remain focused on the top franchises in major growth metros, where these finite, high-volume assets rarely come to market.

First quarter acquisition spending by the publics rose to an estimated $790 million, up from just $154 million a year earlier, bringing their trailing-twelve-month spending above $5 billion, the second highest level on record. Acquisition activity remained concentrated in the highest-demand franchises, with luxury franchises representing 64% of acquisitions since January 2025, led by Lexus, Mercedes-Benz and Toyota.

Buyers Remain Confident Despite Softer Earnings

The quarter’s record valuations are notable against the backdrop of lower earnings. Kerrigan Advisors estimates that average dealership earnings fell 15% to 20% year-over-year, bringing the average public dealership’s trailing twelve-month earnings to $3.9 million. Industry performance in the quarter was materially impacted by severe weather that affected roughly 50% of the continental US population, as well as difficult comparisons to the first quarter of 2025, when consumers accelerated purchases ahead of anticipated tariff-driven price increases.

Even with the decline, dealership sales and earnings are structurally above pre-pandemic levels. Among the key dynamics buyers cite for this are structurally higher new vehicle gross margins relative to pre-pandemic metrics, a decline in new vehicle days’ supply to 79 at the end of March, and a lift in used vehicle sales to pre-pandemic levels due to the rising supply of off-lease vehicles. Buyers also point to the strength of the US economy in 2026, with new business formation up 16%, new job creation up 88% and unemployment modestly lower, along with improved vehicle affordability over the past year.

“The earnings decline this quarter relative to first quarter 2025 was largely a result of weather and tough comparisons to a year ago, not a deterioration in the underlying business,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “Buyers are focused on the structural strengths of auto retail – higher new vehicle gross margins, disciplined inventory, rising used vehicle supply and a resilient US economy – and they remain confident that today’s earnings represent a sustainable floor, rather than a temporary peak.”

First Quarter 2026 Buy/Sell Trends

In the First Quarter 2026 Blue Sky Report, Kerrigan Advisors identified three important trends expected to meaningfully impact the auto retail market in 2026 and beyond.

• Future cost savings from AI are enhancing pro forma earnings projections
• OEM image investments prompt capital allocation assessments and more divestitures
• The make-up of the leading dealership groups is evolving

AI Expected to Improve Earnings, Lifting Future Valuations

Buyers increasingly expect artificial intelligence (“AI”) to improve dealership earnings, and some of the industry’s largest consolidators are beginning to project AI’s future cost savings and revenue enhancements into their pro formas for their own businesses and their acquisition opportunities. OEMs share a similar sentiment, as referenced in Kerrigan Advisors’ 2026 OEM Survey, where 59% of surveyed OEM executives expect AI to increase future dealership profitability.

Kerrigan Advisors believes dealership acquirers will increasingly underwrite future earnings growth based on anticipated operational improvements from AI, which could support higher acquisition valuations over time as buyers place greater emphasis on future earnings, rather than relying solely on trailing performance.

OEM Facility Requirements Prompt More Divestitures

In Kerrigan Advisors’ 2026 OEM Survey, 43% of OEMs indicated they expect to require a new image facility within the next five years. The increase in new OEM image programs is prompting more dealers to reevaluate whether these investments are the highest and best use for their capital. Rather than commit capital to projects with uncertain earnings upside, both large and small dealer groups are increasingly choosing to divest franchises requiring substantial upgrades and redeploy that capital into acquisitions or other investments with stronger projected returns. This trend is particularly evident among the publics who sold 22 franchises in the quarter for over $800 million and whose cash received from divestitures and asset sales has become an increasingly meaningful source of capital for investment.

The Make-Up of the Leading Dealership Groups is Evolving

The composition of the industry’s largest dealership groups is evolving in two important ways. First, more outside capital is entering the industry: since 2021, the estimated number of dealerships owned by the Top 100 groups backed by outside capital rose 58% to 510. Second, the leading groups are concentrating their ownership into higher-volume dealerships across fewer rooftops, growing revenue far faster than store count. Over the last decade, the Top 150 added roughly 850 dealerships, a 25% increase, while their aggregate revenue grew by $164 billion, a 72% increase. At this current revenue growth trajectory, Kerrigan Advisors projects these 150 dealers could capture more than 50% of total industry revenue by 2040, meaning roughly 3% of the dealer body would represent the majority of industry sales, and a minority of dealerships.

Blue Sky Multiple and Outlook Adjustments

In the first quarter of 2026, Kerrigan Advisors made two adjustments to its blue sky multiples and one adjustment to its outlooks. These adjustments reflect rising buyer demand for high growth import franchises and the continued bifurcation between the industry’s strongest and weakest performers.

First Quarter Multiple Increase: Kia

In the non-luxury segment, Kerrigan Advisors increased Kia’s blue sky multiple, reflecting strong buyer demand and rising blue sky pricing for the franchise.

• Kia’s low-end multiple increased to 4.75x. Sales per franchise grew 40% since 2020, among the highest in the industry, and dealer trust in the franchise rose in 2025. Kia’s US light vehicle sales in the first quarter of 2026 rose 4% year-over-year (compared to a decline of 6% for the overall industry), achieving a new first quarter record, led by the Telluride, Sportage and Carnival, as well as accelerating hybrid sales. Kerrigan Advisors maintains a positive outlook on the franchise.

First Quarter Multiple Decrease: Audi

In the luxury segment, Kerrigan Advisors reduced Audi’s blue sky multiple this quarter, driven by weakening buyer demand and declining dealer sales and profits.

• Audi’s multiple decreased to 5.75x on the low-end and 6.25x on the high-end, reflecting a 47% decline in average sales per rooftop since 2019, well below key competitors, and a dealership-level new vehicle sales throughput nearly one-third that of its top competitor, BMW. The franchise also ranks among the lowest in dealer trust compared to its top luxury competitors. Kerrigan Advisors maintains a negative outlook on the franchise until a sustainable sales and profit turnaround is achieved.

First Quarter Outlook Change: Nissan

Kerrigan Advisors moved Nissan’s multiple outlook from negative to steady, as the franchise shows early progress in its US turnaround, with retail sales rising 9.6% in the first quarter, marking six consecutive months of retail sales growth, even as total sales including fleet declined 7.7%.

“Our multiple adjustments this quarter reflect a market that continues to reward top franchises that achieve consistent sales momentum and disciplined inventory production, while discounting those facing demand and profitability pressure,” said Erin Kerrigan. “Kia’s trajectory exemplifies the kind of high-growth, high-trust franchise buyers are competing for, and reflects the K-shaped dynamic occurring with blue sky values, where top performers continue to rise and hit record valuations, while bottom performers see their blue sky decline, in some cases below pre-pandemic prices.”

Highlights from the First Quarter 2026 Blue Sky Report® by Kerrigan Advisors include:

• 478 buy/sell transactions were completed on a trailing-twelve-month basis through March 2026, a new industry record, and 114% above the pre-pandemic five-year average.
• Multi-dealership transactions reached 108 on a trailing twelve-month basis, rising 36% year-over-year during the quarter.
• The publics’ average acquisition purchase price per dealership rose to nearly $200 million, a record, up 253% from 2025’s average.
• The Kerrigan Blue Sky Index rose to 178 in the first quarter, 78% above 2019 levels, with Toyota and Lexus achieving record blue sky values and driving the index up.
• Average dealership earnings declined an estimated 15% to 20% year-over-year during the quarter, resulting in average public dealership trailing twelve-month earnings of $3.9 million.
• Public dealer groups allocated an estimated $790 million to US dealership acquisitions in the quarter, driving twelve-month spending above $5 billion, the second highest on record.
• Dealerships owned by Top 100 groups backed by outside capital rose 58% since 2021 to 510.

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, requested by over 16,000 industry participants from 35 countries, includes analysis of all US dealership transaction activity, 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 440 franchises generating more than $10 billion in client proceeds, including two of the largest transactions in auto retail history – the sale of Jim Koons Automotive Companies to Asbury 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, Kerrigan Advisors is the only firm in auto retail exclusively dedicated to sell-side advisory, providing its clients with 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 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 and market trends, while also providing key insights into factors influencing auto retail. Kerrigan Advisors also conducts annual surveys of dealers and OEM executives regarding market and valuations trends, which are the most responded to in the industry. To read the 2025 Kerrigan Dealer Survey, click here. To read the 2025 Kerrigan OEM Survey, click here. The firm also publishes a podcast, Beyond Blue Sky – A Kerrigan Conversation, where Kerrigan Advisors’ clients and industry leaders share the mindset, strategy and personal stories behind their once-in-a-generation transactions. Kerrigan Advisors is the co-author of NADA’s Guide to Buying and Selling a Dealership.

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