Dealership Buy/Sell Market Reaches Record Levels in First Quarter of 2026 as Multi-Dealership Transactions and Premium Franchise Valuations Drive Momentum
The U.S. auto dealership buy/sell market achieved another historic milestone in the first quarter of 2026, underscoring the resilience and long-term attractiveness of automotive retail. According to the newly released First Quarter 2026 Blue Sky Report® from Kerrigan Advisors, dealership transaction activity surged significantly, setting a new all-time high for trailing twelve-month buy/sell activity and reinforcing the sector’s continued momentum despite softer dealership earnings.
The report revealed that 478 dealership transactions were completed on a trailing twelve-month basis through March 2026, representing the highest level ever recorded over a comparable period. This figure marks a 21% increase compared to the first quarter of 2025 and stands 114% above the industry’s five-year pre-pandemic average. The sustained pace of acquisitions highlights growing investor confidence in auto retail, supported by rising franchise values, strategic consolidation efforts, and the enduring strength of dealership fundamentals.
Industry observers note that while dealership profitability moderated year-over-year, strong buyer confidence, increased multi-dealership transactions, and record valuations among top-performing automotive brands continued to support robust acquisition activity.
Industry Consolidation Continues to Accelerate
Kerrigan Advisors emphasized that the first quarter’s record-breaking performance demonstrates how dealership buyers are increasingly focused on long-term market fundamentals rather than temporary earnings fluctuations.
According to Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors, the dealership buy/sell market has now entered its sixth consecutive year of record-setting activity, signaling a structural shift toward ongoing consolidation within the auto retail industry.
Kerrigan noted that the current pace of consolidation has become deeply embedded within the market, driven by confidence in the durability of dealership economics and the long-term profitability of the retail automotive sector. Although earnings performance softened during the quarter, highly desirable dealership franchises continued commanding premium valuations, prompting more owners to consider bringing valuable assets to market.
The company believes this momentum will continue throughout 2026, particularly for franchises associated with leading import and luxury automotive brands that have demonstrated strong operational performance and sustained consumer demand.
Multi-Dealership Transactions Gain Momentum
One of the key drivers behind the market’s accelerated growth in 2026 was a sharp increase in multi-dealership acquisitions. These transactions, often involving dealership groups seeking operational scale and regional market expansion, increased 36% year-over-year.
On a trailing twelve-month basis, multi-dealership transactions climbed to 108 deals, reflecting renewed confidence among buyers seeking portfolio diversification and efficiencies through consolidation.
The increase in larger acquisitions demonstrates a broader strategic shift among buyers, many of whom are increasingly targeting dealership groups capable of generating stronger operating leverage, broader geographic reach, and higher long-term returns.
Industry participants have also pointed to the benefits of centralized operations, shared technology infrastructure, and increased bargaining power with manufacturers as key incentives behind larger dealership portfolio acquisitions.
At the same time, dealership valuations continued climbing.
The Kerrigan Blue Sky Index, a benchmark measuring dealership franchise values, increased to 178 during the first quarter of 2026, placing it 78% higher than pre-pandemic 2019 levels. Certain high-demand brands, particularly Toyota and Lexus, reached record blue sky values during the quarter, reinforcing buyer appetite for premium-performing franchises.
These elevated valuations have encouraged more owners of sought-after dealerships to enter the market, contributing to the growing share of premium-brand transactions compared with previous years.
Premium Franchise Valuations Reach New Highs
The quarter also witnessed unprecedented acquisition pricing, particularly among publicly traded dealership groups.
Kerrigan Advisors reported that the average acquisition purchase price per dealership among public retailers rose to nearly $200 million during the quarter, representing an increase of more than 250% from 2025 levels. The substantial increase reflects the premium buyers are willing to pay for limited, high-volume dealership assets tied to top-performing brands.
Among the quarter’s most notable transactions was Penske Automotive Group’s estimated $670 million acquisition of two high-profile Lexus dealerships in Central Florida — Lexus of Orlando and Lexus of Winter Park. The transaction reportedly represents the highest price ever paid for two dealerships in U.S. automotive retail history.
Public dealership groups continue prioritizing acquisitions involving premium franchises located in major metropolitan markets with strong demographic growth and high consumer demand. Because these assets rarely become available, competition among buyers remains intense, further supporting elevated pricing levels.
During the first quarter, public dealer groups allocated an estimated $790 million toward U.S. dealership acquisitions, a dramatic increase compared with approximately $154 million spent during the same period in the prior year.
On a trailing twelve-month basis, acquisition spending among public retailers surpassed $5 billion, making it the second-highest annual spending level ever recorded.
Luxury franchises represented a dominant portion of recent acquisitions, accounting for approximately 64% of purchases since January 2025. Leading acquisition targets included Lexus, Mercedes-Benz, and Toyota franchises, reflecting strong buyer preference for premium brands with consistent profitability and customer loyalty.
Buyers Maintain Confidence Despite Lower Earnings
Notably, the quarter’s strong valuation environment developed despite softer dealership earnings.
Kerrigan Advisors estimates average dealership earnings declined between 15% and 20% year-over-year, bringing trailing twelve-month earnings for the average public dealership to approximately $3.9 million.
Several external factors contributed to the earnings moderation.
Severe weather conditions affected nearly half of the continental U.S. population during the quarter, disrupting dealership traffic and operations in multiple markets. Additionally, dealerships faced difficult comparisons against the first quarter of 2025, when consumers accelerated vehicle purchases ahead of anticipated tariff-related price increases.
Despite these temporary pressures, buyers continue viewing dealership economics as structurally stronger than pre-pandemic conditions.
Several key market dynamics continue supporting buyer confidence, including improved new vehicle gross margins relative to historical norms, disciplined inventory management practices, and healthier used vehicle supply conditions.
New vehicle days’ supply declined to 79 days by the end of March, supporting stronger pricing discipline across many brands. Meanwhile, the growing availability of off-lease vehicles helped used vehicle sales return to pre-pandemic levels, improving dealership profitability opportunities.
Buyers also cite broader economic strength as a supporting factor.
In 2026, new business formation reportedly increased 16%, while job creation rose 88%. Unemployment also declined modestly, supporting stronger consumer purchasing confidence. Improved vehicle affordability over the past year further strengthened expectations for continued demand stability.
Ryan Kerrigan, Managing Director of Kerrigan Advisors, stated that the quarter’s earnings decline should be viewed in context, emphasizing that temporary weather disruptions and difficult year-over-year comparisons weighed heavily on results.
He explained that buyers remain focused on the structural strengths of automotive retail, including disciplined inventory management, higher vehicle margins, rising used vehicle supply, and a resilient economic environment, all of which contribute to confidence that current earnings represent a sustainable foundation rather than an unsustainable peak.
Emerging Buy/Sell Trends Expected to Shape 2026
In its First Quarter 2026 Blue Sky Report®, Kerrigan Advisors identified several important trends expected to influence dealership buy/sell activity throughout 2026 and beyond.
Among the most significant is the increasing role of artificial intelligence in dealership operations.
Many buyers now expect AI-driven technologies to improve future dealership profitability through operational efficiencies, workforce optimization, and enhanced revenue opportunities. Some of the industry’s largest dealership consolidators have reportedly begun incorporating projected AI-related cost savings and revenue enhancements into acquisition underwriting models and future earnings projections.
Original equipment manufacturers (OEMs) also appear optimistic regarding AI’s impact. According to Kerrigan Advisors’ 2026 OEM Survey, 59% of surveyed OEM executives believe artificial intelligence will contribute positively to future dealership profitability.
Kerrigan Advisors expects acquirers to place growing emphasis on projected future operational improvements rather than relying solely on historical earnings performance when evaluating acquisition targets.
Another major trend involves dealership capital allocation decisions related to OEM facility image requirements.
The 2026 OEM Survey indicated that 43% of manufacturers expect dealerships to implement new image facilities within the next five years. As facility upgrade costs rise, many dealer groups are reassessing whether large capital expenditures offer the strongest long-term return on investment.
Rather than commit capital to expensive renovations with uncertain profitability upside, some dealers are choosing to divest franchises requiring major facility investments and redeploy capital toward acquisitions or higher-return business opportunities.
This trend has become increasingly evident among public dealer groups, which reportedly sold 22 franchises during the quarter for more than $800 million, creating additional liquidity for future investments.
Additionally, the composition of the nation’s leading dealership groups continues evolving.
Since 2021, dealerships owned by Top 100 dealer groups backed by outside investment capital increased 58%, reaching 510 rooftops. At the same time, leading dealership groups increasingly prioritize higher-volume operations across fewer locations, enabling revenue growth to outpace dealership count expansion.
Over the past decade, the Top 150 dealership groups expanded store ownership by approximately 25%, while collective revenue surged 72%, reflecting a shift toward larger, higher-performing operations.
Kerrigan Advisors projects that, if current growth trends continue, the Top 150 dealer groups could account for more than half of industry revenue by 2040, fundamentally reshaping the structure of U.S. automotive retail.
The First Quarter 2026 Blue Sky Report® also introduced adjustments to franchise blue sky multiples, including a valuation increase for Kia due to rising demand and strong sales performance, and a reduction for Audi amid declining dealership throughput and softer profitability. Nissan’s outlook was revised from negative to steady as early signs of retail sales recovery emerged.
The continued divergence between high-performing and underperforming franchises illustrates a widening gap in dealership valuations, reinforcing buyer focus on brands demonstrating strong sales momentum, inventory discipline, and long-term earnings stability.
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