The auto dealership buy/sell market had 397 completed dealership transactions last year, a new record and up 6% compared to 2022, according to the just-released Blue Sky Report by Kerrigan Advisors. This activity included the third largest transaction in auto retail history – the sale of Kerrigan Advisors’ client, Jim Koons Automotive Companies representing 20 dealerships and the addition of $3 billion of revenue to Asbury Automotive Group. Fueled by significant access to capital, auto retail defied the broader corporate mergers and acquisitions (M&A) market, which declined 30% in 2023. In 2023, 680 franchises were sold, an increase of 5.4% compared to 2022.

“Despite negative headwinds of higher interest rates and declining profit margins, dealers continued to seek acquisitions, powered by their belief that scale is not only critical to future success, but essential to sustaining their businesses in the face of an evolving industry,” said Erin Kerrigan, founder and managing director of Kerrigan Advisors. “We expect the consolidation trend, ignited by the pandemic-induced surge in industry earnings, to continue in 2024 as the industry has amassed nearly a quarter of a trillion dollars of pre-tax earnings since the pandemic.”

To underscore this, Kerrigan noted that nearly half of the dealers surveyed by Kerrigan Advisors in November 2023 said they planned to acquire one or more dealerships in the next twelve months, while only 6% expected to sell dealerships in the same period. The Kerrigan Dealer Survey has the highest level of respondents of any survey in the industry at over 650.