Critical Shifts:
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AI is a Profit Engine: 59% of OEM executives expect AI to increase dealership profits, with 90% of dealers already using or planning to deploy it to cut operating expenses.
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OEMs to Absorb Tariffs: In a major relief for retail partners, automakers plan to shoulder the bulk of tariff costs rather than passing them down to dealers.
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Accelerating Consolidation: 45% of OEMs project a smaller, more consolidated network of larger and better-capitalized dealerships over the next five years.
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Rising Facility Demands: Capital requirements are climbing, with 43% of OEMs requiring a new image facility within five years.
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Valuations Hold Strong: 82% of OEM executives expect dealership "blue sky" values to stay flat or rise, reinforcing a highly active buy/sell market pacing at double pre-pandemic levels.
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Reflecting a strong outlook for US automotive retail among OEMs, the 2026 Kerrigan OEM Survey reveals that OEMs are increasingly seeing AI as a profitability driver at the retail level, as they navigate softening new vehicle sales and absorb the lion’s share of tariffs, all while maintaining confidence in dealership blue sky values and expecting a very active buy/sell market in the year ahead.
“The story of this year’s survey is that OEMs see the economics of the dealership model getting stronger, not weaker,” said Erin Kerrigan, founder and managing director of Kerrigan Advisors. “They expect AI to increase future dealership profitability, and they plan to shoulder the bulk of tariff costs themselves rather than pass them to their dealers. That combination of rising dealer productivity and sustainably higher retail vehicle margins helps explain why OEMs project blue sky values to hold firm, or increase, even as vehicle prices climb and vehicle sales rates flatten.”
For the first time, Kerrigan Advisors asked OEM executives how they expect AI to affect future dealership profits, and the results were decisive: 59% believe AI will increase dealership profits, while 37% expect no change, and just 4% anticipate a decrease. The finding is reinforced by the 2025 Kerrigan Dealer Survey, in which 90% of dealers reported they are already using or plan to use AI in their operations, indicating that the operational adoption needed to realize those gains is already underway. Kerrigan Advisors expects wide-scale AI deployment to reduce selling expenses and lift revenue per employee, boosting dealer productivity and profitability.
“AI is moving from experiment to infrastructure in the dealership,” said Ryan Kerrigan, managing director. “When OEMs and dealers alike expect it to lower operating costs and raise revenue per employee, that’s a structural improvement to the profitability of the business, and a meaningful part of why we project future dealership earnings and blue sky values to stay strong.”
The survey results also reveal that OEM executives increasingly envision a dealership network of fewer, larger and better-capitalized retailers. Those who expect fewer dealers in their network in the next five years increased 12 percentage points, to 45% from 33% in 2025, while only 14% expect to add dealers. This reflects the industry’s long-term consolidation trajectory, with buy/sell activity now pacing at roughly double its pre-pandemic level. Rising facility standards are also accelerating that dynamic, with 43% of OEM executives indicating their organization will require a new image facility within five years.
