U.S. Auto Retail Industry Sees Strong Q2 2025 Profits Amid Unusual Market Forces, Haig Report® Finds
The U.S. automotive retail industry has just wrapped up one of its most profitable quarters in recent years, and while the financial results look impressive on paper, the underlying forces behind this surge reveal a story of short-term boosts, shifting market dynamics, and continued resilience among dealers.
According to the newly published Q2 2025 Haig Report® from Haig Partners, profits for public dealer groups rose 20% per store compared to the same period last year. This dramatic year-over-year jump was not entirely due to organic growth. Instead, two unique, short-term factors significantly inflated performance:
- A favorable comparison to Q2 2024’s CDK dealer management system outage – A year ago, dealerships across the country faced major disruptions when CDK Global suffered a crippling cyberattack that paralyzed operations for weeks. That event depressed dealer profits in 2024, making this year’s performance appear even stronger by comparison.
- A pre-tariff buying surge – Following President Trump’s April 2 “Liberation Day” announcement, consumers rushed to buy vehicles ahead of expected tariffs, creating an artificial sales spike at robust margins.
“These unusual boosts have made Q2 look stronger than it may prove to be for the rest of the year,” explained Alan Haig, President of Haig Partners. “But the fundamentals remain healthy, demand to buy dealerships is strong, and dealers have shown again and again that they can adapt to whatever the market throws at them.”
Key Insights from the Q2 2025 Haig Report®
The report, widely regarded as a barometer of dealership market health, highlighted several notable trends shaping auto retail valuations and buy-sell activity:
Franchise Valuation Changes
- Winners: Toyota, Kia, and Hyundai/Genesis saw multiple increases this quarter. Their strong product lineups, reliable supply chains, and consumer demand have made them highly attractive for buyers.
- Losers: Audi experienced a significant valuation cut, driven by prolonged sales declines, inventory imbalances, and waning consumer interest.
Blue Sky Values Remain Elevated
Average dealership “blue sky” values — essentially the intangible goodwill value of a franchise — remain about twice as high as pre-COVID levels. This is due to a combination of strong earnings and stable valuation multiples, even though the pace of buy-sell transactions has slowed.
Shifts in Market Momentum
- Private buyers are broadening their appetite, aggressively pursuing opportunities across brands and geographies.
- Public dealer groups are becoming more selective, targeting top-performing brands or acquisitions that strategically complement their existing portfolios.
Pipeline Strength
Despite a slower overall market, Haig Partners is actively advising on 67 dealership transactions signed or closed in 2025, representing an 18% increase compared to last year. This level of activity suggests that demand for dealerships remains resilient, even in a climate of uncertainty.
The Buy-Sell Market: A Tale of Two Halves
While dealership profits surged, buy-sell activity slowed considerably in the first half of 2025. Only 192 U.S. rooftops changed hands between January and June — a steep 39.4% decline from the same period in 2024.
Drivers of the Slowdown
Several factors contributed to this deceleration:
- Election-year uncertainty, which often causes hesitation in large financial transactions.
- Tariff-related headlines, leading both buyers and sellers to pause and reassess valuations.
- Widening expectations gap, as sellers sought to capitalize on record-high valuations while buyers exercised caution.
Outlook for the Second Half of 2025
Haig Partners projects that transaction volumes will rebound in the second half of the year as the political and economic outlook becomes clearer. However, activity is likely to normalize at 300–400 sales annually, down from the pandemic-era frenzy of 550–700 sales per year when valuations spiked.
Economic & Operational Outlook: What’s Next for Dealers?
The Q2 2025 Haig Report® also offers insights into broader economic forces shaping dealership performance:
Tariffs Will Begin to Bite
While automakers initially absorbed tariff costs, Q3 is expected to bring price increases that filter down to both dealers and customers. The impact will vary by brand, potentially reshuffling dealership valuations depending on which manufacturers pass along more of the burden.
Interest Rate Cuts on the Horizon
With the Federal Reserve signaling potential rate cuts later in 2025, two key benefits are expected:
- Lower borrowing costs will make acquisitions more attractive, spurring buy-sell activity.
- Reduced interest rates will improve vehicle affordability for customers, supporting retail sales.
EV Mandate Rollbacks
The removal of federal EV mandates is reshaping the risk profile for dealerships, particularly in states that previously adhered to stricter CARB (California Air Resources Board) standards. Dealers now have greater flexibility to stock and sell vehicles that align with consumer demand rather than regulatory quotas.
Industry Voices: Adapting to Change
The report highlights a candid perspective from Senator Bernie Moreno, who remarked during a recent interview with Alan Haig:
If I was in the car business today, I would be investing, I’d be buying, I’d be growing, because you take advantage of the fact that some people don’t know how to manage change.”
This sentiment reflects the broader confidence among buyers. Haig Partners confirms that public and private groups alike are seeking expansion, even with tariff uncertainties looming. Alan Haig added, “No one is calling us desperate to sell. The mood is one of cautious optimism, not retreat.”
Beyond Numbers: The Human Side of Dealership Transitions
The Haig Report® is not just a collection of financial data — it also reflects the deeply personal nature of dealership sales and acquisitions. For many owners, selling a dealership represents one of the most significant financial and emotional decisions of their careers.
“At Haig Partners, we are honored to be invited into this process,” the report notes. “Our mission is not only to provide sharp market insights but also to guide clients through what can be a transformative moment in their professional and personal lives.”
With decades of experience in dealership transactions, Haig Partners positions itself as a trusted advisor, helping clients maximize value, preserve legacies, and ensure smooth transitions for employees, customers, and communities.
Profits Now, Questions Ahead
The Q2 2025 Haig Report® paints a complex picture of the U.S. auto retail industry:
- Profits are soaring, but largely thanks to temporary boosts that may not carry into future quarters.
- Valuations remain historically high, keeping dealership ownership an attractive investment.
- Buy-sell volumes are slowing, but the appetite for acquisitions is still strong, setting the stage for a rebound later in the year.
- Economic shifts — tariffs, interest rates, and regulatory changes — will likely redefine the competitive landscape in the months ahead.
Ultimately, the industry remains resilient. Dealers, as Alan Haig emphasized, continue to prove their ability to adapt, evolve, and thrive no matter the challenges they face.
