Dealer results still depend heavily on brand, but hybrid demand, affordability pressures, and higher interest rates are benefiting some franchises and straining others. These effects are reflected in days’ supply, earnings, and buy-sell activity. Joining us on today’s episode of Inside Automotive is Ryan Kerrigan, Managing Director at Kerrigan Advisors, to discuss how Toyota and Lexus dealership values have reached levels the buy-sell market has never seen, even as inventory nears 3 million units.
Toyota and Lexus demand setting valuation records
Toyota grew market share again in the third quarter and is edging closer to General Motors for the top spot in U.S. volume, Kerrigan said. GM fell 5.5% in market share in Q3, while Toyota gained just over half a percent. Toyota has largely done this through its existing dealer body, without adding new dealers over the past 20 to 30 years.
That loyalty is showing up in buy-sell results, as Penske’s publicly announced $500 million purchase of two Lexus stores in Orlando followed a large outcome for two Lexus stores in Utah. Additionally, multiple Toyota and Lexus stores have since traded for several hundred million dollars of blue sky, as buyers see these assets as rare, and what they are willing to pay has no precedent even compared with 12 months ago, Kerrigan said.
“This is just a complete resetting of the table of valuation around those two franchises.”
According to Kerrigan, hybrids hold about 16% market share while EVs have fallen to 6%, and Toyota sells about 45% to 50% of hybrids. Lexus is also adding supply, with 35,000 units reallocated globally to the U.S. because of softness in China and strength here. He expects the brand to hold or grow that allocation over time.
Inventory and affordability splitting results by brand
Inventory reached about 3 million units in October as higher interest rates began to weigh on the market. Kerrigan said the stock is weighted toward expensive, heavier, less fuel-efficient vehicles, which puts more pressure on dealer balance sheets and floor plans.
The spread between brands is as wide as ever. Toyota carries about 40 days of supply and Honda and Subaru sit at 50 to 60, while some Dodge Ram and Jeep products run 130 to 150 days, Kerrigan said. Affordable models such as the Civic, Corolla and Camry are turning at industry highs.
Public groups were flat on revenue, with earnings down about 8% on average, Kerrigan said, citing interest rates, gas prices, affordability and supply chain issues. Private dealers show a flight to quality, with the right franchise in the right market at or near record profitability. Toyota and Lexus are still trending up in 2026, while other locations have seen margins retreat.
Plan for an active but selective buy-sell market
The Southeast and Sunbelt states remain where deal energy is concentrated, Kerrigan said. Recent Kerrigan Advisors announcements include Atlanta, North Carolina and Memphis, Tennessee, with a handful of deals in Florida. A modest-sized Toyota or Honda store there can command multiples well above the national average, he said.
Penske’s take-private is moving forward as of mid-October at what Kerrigan believes is a $212 per share strike price, with Penske owning about 70% and Mitsui holding the balance. Access to private capital has grown, so the cost and quarterly scrutiny of being public are no longer required even for a company of that size, he said.
Kerrigan is most optimistic about AI, which can take expense out of service-intensive dealerships at a good time given the macroeconomic pressures. Larger groups with 10 to 30 stores are likely to adopt it faster, which could add to consolidation. He expects a brisk buy-sell market going into 2027, with buyers growing choosier and a possible modest slowdown from higher rates. Dealers considering a transaction should expect active but more selective buyers.
