The auto dealership buy/sell market extended its record run in the first half of 2026, with 224 transactions completed through June and a record 462 buy/sells in the trailing twelve months, exceeding 2025’s record of 458, according to the just-released Second Quarter 2026 Blue Sky Report® by Kerrigan Advisors, the industry authority on the dealership buy/sell market and valuation trends distributed to over 17,000 industry participants in 35 countries. The elevated pace, 107% above the pre-pandemic average from 2015-2019, held even as industry earnings declined year-over-year, reflecting a market that continues to focus on auto retail’s consolidating future, rather than on short-term profitability.

“The auto dealership buy/sell market set yet another transaction record, even as gross margins and earnings softened. Today’s active buy/sell market and record valuations for marque franchises are powerful indicators of dealers’ faith in the long-term growth prospects of auto retail profits,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “Buyers are underwriting the evolution of the auto retail business model as scale, consolidation and technology enhance the industry’s profit outlook, particularly for the largest, most technologically advanced groups.”

Buyers paid record prices for the industry’s most desirable franchises as demand remained strong and increasingly selective, concentrated on top import franchises. Underlying much of this activity is a growing conviction from Wall Street that scale, increasingly amplified by technology and the use of AI, will define the industry’s next phase. Kerrigan Advisors expects these dynamics to continue through 2026 and into 2027.

The Drive for Scale is Fueling Record Activity

Kerrigan Advisors views the drive for scale by the largest dealership groups as the primary force behind today’s elevated buy/sell activity. As the industry consolidates into fewer, higher-volume rooftops, buyers increasingly believe that size is key to profitability growth, both at the rooftop and local-market level. This is pushing buyers to pay premium prices both for the highest-volume stores and for dealership groups that command significant market share in their markets. The announced sale of Kerrigan Advisors’ client Hennessy Automobile Companies, the largest private dealership group in Atlanta, to Group 1 Automotive is a clear example of that premium. At a $1.3 billion purchase price, the transaction is the third-largest in industry history, and its $1 billion in blue sky represents the highest blue sky value ever paid on a per-dealership basis for a 10-dealership group. A key driver of that pricing is Hennessy’s significantly higher sales volume per rooftop: per Group 1, its stores average $170 million in revenue, more than double the national average.

Hennessy is not an isolated case. The publics’ average acquisition spend per dealership surged to a record $119 million in 2026, $67 million above their prior three-year average, while average revenue per acquired dealership reached a record $156 million. Of the dealerships the publics acquired in 2026, 91% were in markets where they already had a presence, further enhancing their geographic concentration and profit expectations. This reflects the publics’ increasingly selective focus on high-volume luxury and import franchises in their top operating markets. Including announced acquisitions, the public dealer groups have closed or announced $2.6 billion of US dealership acquisitions in the first half of 2026, bringing trailing-twelve-month spending to $6.0 billion, the second-highest level in industry history.

“What we are seeing isn’t limited to any one landmark deal. Across the board, public groups are paying record prices to build geographic scale because they are convinced that revenue per rooftop and local market share will define the industry winners in the years ahead,” said Erin Kerrigan.

Earnings Decline, but Record Valuations Draw Premier Franchises into Market

The strength of today’s valuations stands in contrast to first-half earnings. Kerrigan Advisors estimates average dealership earnings declined between 10% and 20% year-over-year, with the US public dealer groups’ average dealership earnings declined 15%. The decline was driven by rising operating costs and lower vehicle gross margins rather than by falling revenue, as average dealership revenue rose to a record $38 million in the first half. Despite the earnings pressure, the Kerrigan Blue Sky Index held steady at 178 in the second quarter, 78% above its 2019 pre-pandemic level.

Record valuations are drawing the industry’s most desirable franchises to market. As buyer demand concentrates in the top import luxury and non-luxury brands, domestic share declined to 46% from 51% in 2025. Stellantis led the domestic brands with 14% buy/sell market share, and Nissan led the imports at 7%. Buyers are acquiring these franchises as their turnarounds get underway, drawn by a low cost of entry and the potential for a very high return on investment should these OEMs regain market share.

In the luxury import segment, the opposite dynamic is at work, as buyers pay steep premiums to capture scarce, once-in-a-lifetime opportunities to add marque brands, including top exotics such as Ferrari. This was the case in the second quarter with the acquisition of Kerrigan Advisors’ client Paramount Automotive’s Foreign Cars Italia by Hendrick Automotive Group, which included the only Ferrari franchise in Hendrick’s headquarter market (Charlotte).

Wall Street Rewards Scale and Technology

Wall Street’s confidence in the largest groups is evident in The Kerrigan IndexTM, which tracks the six publicly traded new car auto retailers and rose 9.4% year-to-date through July, with four of the six groups reaching all-time-high stock prices in 2026. Investors expect the largest groups will increasingly benefit as technology, particularly AI, amplifies the advantages of scale, streamlining the sales and service process, improving productivity, and extending a dealership’s reach well beyond its traditional local market.

Carvana’s rise is a potent illustration of the power of combining scale with technology. Though not one of the six legacy public new car dealers, the online retailer has used AI and proprietary technology to grow rapidly and operate with fewer geographic constraints, and may well prove to be a catalyst for change in auto retail, much as Tesla proved the potential of an alternative distribution model. As of July 31, 2026, Carvana’s $69 billion market capitalization exceeded the combined $40 billion value of the six legacy public dealer groups. That same technology is expanding each dealership’s addressable market well beyond its traditional area of responsibility: the share of consumers crossing state lines to purchase new and used vehicles has risen more than 30% since 2021, eroding the geographic boundaries that have long defined the franchise model.

“The message from Wall Street is clear: the future belongs to those who can combine scale with technology to operate more efficiently and reach customers well beyond their local market. New car dealers are taking note, and it is reinforcing their imperative to grow and invest to compete effectively, particularly in the age of AI,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors.

Second Quarter 2026 Buy/Sell Trends

For the second quarter of 2026, Kerrigan Advisors identified the following three trends that the firm expects to impact the buy/sell market for the remainder of 2026 and into 2027:

  • With Increased Consolidation and Higher Transaction Values, the Buy/Sell Market Becomes More Complex

  • Blue Sky Multiples Diverge Significantly by Geographic Location

  • Revenue per Rooftop and Local Market Share Drive Dealership Group Valuations

With Increased Consolidation and Higher Transaction Values, Buy/Sell Market Becomes More Complex

The auto retail buy/sell market is no longer the “back-of-the-napkin” endeavor of its past. Kerrigan Advisors estimates the average multi-dealership transaction is now valued at approximately $90 million, up considerably from before the pandemic, driven in part by a larger number of franchises per transaction, reaching nearly 3.5 franchises per group sale in 2026. These larger, more complex transactions require greater investment sophistication, access to capital and transaction expertise, and are increasingly drawing outside debt and equity capital into the industry.

Blue Sky Multiples Diverge Significantly by Geographic Location

Geography, particularly the state in which a dealership is located, has never been more impactful to blue sky multiples. As interstate migration favors lower-tax, business-friendly states such as Texas, Florida, the Carolinas, Georgia, Arizona and Tennessee, franchises in high-growth states are commanding premiums of as much as 2.5 turns on their blue sky multiples, while dealerships in states with contracting populations and challenging operating environments are seeing average or discounted multiples. Kerrigan Advisors expects these valuation premiums to persist in the most attractive states, with potential for corresponding discounts in slower-growth markets depending on franchise quality.

Revenue per Rooftop and Local Market Share Drive Group Valuations

A long-standing valuation paradigm is shifting. Historically, higher-performing dealerships often received lower multiples because buyers viewed outsized performance as personality-driven and difficult to sustain. Today, as sales consolidate into fewer, higher-volume rooftops and auto retail becomes more technology-driven, buyers increasingly view outsized profitability as systemic to the operations and a product of scale, making it more sustainable. Higher revenue per rooftop provides increased operating leverage, while greater local market share creates additional opportunities to distribute advertising, inventory, personnel and technology costs across a larger revenue base. As a result, high-volume dealerships and groups with significant local market share are increasingly commanding premium valuations.

Blue Sky Multiple Outlook Adjustments

In the second quarter of 2026, Kerrigan Advisors made three adjustments to its blue sky multiples – one upgrade and two downgrades – and one outlook change.

Multiple Increase and Outlook Change: Kia and Honda

Kerrigan Advisors increased Kia’s low-end blue sky multiple to 5.0x from 4.75x, reflecting strong dealership profitability, rising buyer demand and higher blue sky pricing, particularly in high-growth markets such as Texas and Florida. Kia’s US sales rose 3.4% in the first half, while the overall industry declined 2.7%, and the franchise maintained a disciplined 74-day supply, six days below the industry average. Kerrigan Advisors maintains a positive outlook on the franchise.

Kerrigan Advisors also upgraded Honda’s multiple outlook to positive. Honda delivered its strongest first-half sales performance since 2021, led by the CR-V becoming America’s best-selling new vehicle in the first half, and benefited from an affordable lineup and record hybrid sales. Given Honda’s improving sales performance, attractive product mix and strong buyer demand, Kerrigan Advisors expects the franchise’s blue sky multiple to increase in the coming quarters.

Multiple Decreases: Volkswagen and Audi

Kerrigan Advisors downgraded Volkswagen’s blue sky multiples to 2.25x –3.0x and Audi’s to 5.5x –6.0x. Buyer demand for Volkswagen remains extremely low, with some franchises closing rather than being acquired in group transactions. Volkswagen dealers are challenged by elevated days’ supply, weak franchise profitability and the absence of a hybrid offering; Volkswagen’s US EV sales fell 68.8% year-over-year in the first half. Audi faces similar pressure, with the first-half US sales down 17.1% and EV sales down 85%, compounded by an aging SUV lineup and the broader financial challenges facing Volkswagen Group.

“Our blue sky multiple adjustments this quarter reflect a market that continues to reward franchises with sales momentum and disciplined inventory, such as Toyota, Honda and Kia, while discounting those facing demand and profitability pressure, such as VW and Audi. The gap between the industry’s strongest and weakest franchises continues to widen,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors.

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

  • 224 dealership transactions were completed in the first half of 2026, up 2% from 220 in the same period of 2025.

  • A record 462 buy/sell transactions were completed in the trailing twelve months ended June 2026, exceeding 2025’s record of 458 and 107% above the pre-pandemic average.

  • 351 franchises sold in the first half of 2026, up 17% from 317 in the first half of 2025, with each transaction representing 1.57 franchises on average versus 1.44 a year earlier.

  • The publics’ average acquisition spend per dealership rose to a record $119 million, $67 million above their prior three-year average while average revenue per acquired dealership reached a record $156 million.

  • The US public dealer groups closed or announced $2.6 billion of US dealership acquisitions in the first half (including Hennessy), bringing trailing-twelve-month spending to $6.0 billion, the second highest on record.

  • The publics’ average blended blue sky multiple reached a recent high of 7.8x, more than double its pandemic-era low of 3.6x.

  • The announced Hennessy Automobile Companies sale to Group 1 established a new large-group benchmark at $100 million in blue sky per dealership.

  • The average multi-dealership transaction is now valued at approximately $90 million, up from roughly $40 million before the pandemic, at nearly 3.5 franchises per group sale.

  • The Kerrigan Blue Sky Index held at 178 in the second quarter, 78% above its 2019 pre-pandemic level.

  • Domestic franchises’ share of the buy/sell market declined to 46% in the first half, down from 51% in 2025, as buyer demand shifted toward scarce import franchises.

  • The six public dealer groups collectively hold $6.7 billion in available liquidity as of the end of the second quarter of 2026.

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, received by over 17,000 industry recipients in 35 countries, includes analysis of all dealership transaction activity for the year, 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.

Kerrigan Advisors also releases The Kerrigan Index™ monthly, which is composed of the six publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail. To access The Kerrigan Index™, 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 450 franchises generating more than $11 billion in client proceeds, including three of the largest transactions in auto retail history – the sale of Jim Koons Automotive Companies to Asbury Automotive Group, Leith Automotive to Holman, and Hennessy Automotive Companies to Group 1 Automotive (planned and expected to close in Q4 2026). 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 with backgrounds in investment banking, private equity, accounting, finance and real estate, 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 monthly The Kerrigan Index™ composed of the six publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail. To read the 2025 Kerrigan Dealer Survey, click here. To read the 2026 Kerrigan OEM Survey, click here. Kerrigan Advisors also is the co-author of NADA’s Guide to Buying and Selling a Dealership. Additionally, Kerrigan Advisors publishes a podcast, Beyond Blue Sky – A Kerrigan Conversation, where Kerrigan Advisors’ clients and industry leaders share the mindset, strategy and personal stories behind a once-in-a-generation transaction. Listen to the latest episode of Beyond Blue Sky featuring industry legend, Rick Hendrick, Chairman and CEO of Hendrick Automotive Group, here.

Media gallery

About The Author
Business Wire