In today’s episode of CBT Now, Erin Kerrigan, founder and managing director of Kerrigan Advisors, joins us to discuss the outlook of the buy-sell markets and sentiment amongst dealers nationwide.
The Kerrigan Advisors released their sixth edition of the Kerrigan Dealer Survey, which measures dealer sentiment in the buy-sell market. Over 600 individual dealers who represent over 10,000 dealerships participated in the survey.
Electric vehicles
Kerrigan noted that 68% of dealers believe electric vehicles (EVs) would hurt their profits in 2025. Interestingly, in contrast, over 70% felt that hybrids would positively impact their profits.
While EVs had a very robust growth during Q4 2024, Kerrigan notes that it was likely because consumers who wanted to try EVs rushed to make their purchases before the incoming Trump administration could scrap the federal tax credit.
Acquisition
50% of dealers surveyed are looking to expand or looking to sell. The number of dealers looking to remain in a steady state is declining. Kerrigan highlights that these trends are indicative of an industry that is consolidating. Many dealers are attempting to expand their enterprise, and others are looking to exit the business.
Franchise valuation
68% of dealers believe that valuations will stay the same or increase in 2025. However, 32% believe that valuation will decline, the highest amount seen before the pandemic. The data is a reflection of the changes within the dealership. During the pandemic, many dealerships saw soaring profits–however, now, an estimated 32% of franchises are seeing their valuation decline.
The franchises that performed best in the survey:
Toyota: 50% of dealers expressed that they’d like to add Toyota to their group, and 83% reported having a high trust level in Toyota.
Honda: While Honda didn’t perform so well in the 2023 survey, this year, it improved the most out of all automakers and ranked #3 in valuation expectations, increasing 11%. 53% of dealers report having a high level of trust in Honda.
However, their recent partnership to create the Sony Honda Mobility company to sell electric vehicles (EVs) directly to consumers could destroy dealer’s trust.
Ford: Ford was the most improved automaker. The 2023 survey ranked it the least trusted franchise, with 48% of dealers expressing no trust in Ford. This year, dealer trust has improved by 11%. Kerrigan suggests Ford management’s EV push likely led to dealers’ distrust in 2023. Their revamped EV strategy has gained trust back.
The bottom performers:
Stellantis: Over 70% of dealers surveyed indicated zero trust in the brand. In addition, 70% of dealers expect the valuation of Stellantis franchises to decline. However, Kerrigan notes that Stellantis stems from the poor management and missteps of former CEO Carlos Tavares. Now that the brand is under new management, there’s hope that it can recover.
Kerrigan also highlights that acquiring a Stellantis dealership could be an excellent opportunistic purchase. When Stellantis does recover, there’s likely to be a great return on investment.
Nissan: 64% of dealers surveyed expect the Nissan value to decline in 2025, a staggering 23% increase from the 2023 survey. In addition, 58% of dealers have no trust in Nissan. However, their potential merger with Honda, a company that is performing quite well, could boost the dealer outlook and build confidence.
Kerrigan also highlights that this may be another opportunistic time to acquire a Nissan dealership as the merger–if it happens– may have the potential to turn things around.
Hyundai: Although Hyundai has incredible sales, they didn’t perform as well as anticipated in the survey. It ranked second in expected value improvement in 2023 behind its sister brand, Kia. 28% of dealers expect Hyundai’s value to decline in 2025, and 28% have no trust in the franchise.
Kerrigan speculates that this decline may be due to Hyundai’s enforcement of stringent facility requirements and increased involvement with M&A activities.
Market share per segment
In the Kerrigan Advisor’s Q3 Blue Sky Report, Stellantis had the most buy-sells of the domestic segment. Nissan had the most buy-sells of the non-luxury imports, and Infiniti had the most buy-sells of luxury imports segments.
Kerrigan highlights that this data reveals a market for these franchises. Although people are divesting from these franchises, for a transaction to work, there must be a willing buyer, and it is clear that people are taking the opportunity to make a purchase.
2025 outlook for the buy-sell market
Kerrigan highlights that the Trump administration is very pro-business, and she has witnessed a very distinct shift in the significant growth qualifiers since the election. In addition, interest rates have dropped, making acquisition financing more attractive.
In addition, stricter OEM facility demands will also increase supply as dealers look to exit their businesses to avoid investing a ton of capital into their businesses.
With all these factors to consider, Kerrigan believes that 2025 will be a very active year in the buy-sell market with a tremendous increase in buyer demand.
"There is a direct correlation between trust and value." – Erin Kerrigan
