3 shifts transforming M&A momentum—and how buyers are positioning to win

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Welcome to The Breakdown, an analysis of auto retail’s top trends, moves, and insights — in under 5 minutes.

Recently, I had Alan Haig back on the Car Dealership Guy Podcast to discuss the dealership M&A market. And he told me more buy/sell deals than ever are being reshaped by forces that have nothing to do with how well dealers run their stores.

Through the first half of 2025, the market was stalled — nobody wanted to be first to find out if new tariffs or economic uncertainty would tank their transaction. Then, in Q3, the floodgates opened. 149 dealerships traded hands, blue sky values rose, and buyers raced to preempt what could be the most volatile policy environment in a decade.

To explain what I mean, I distilled three trends that are quietly shifting who wins and loses in the buy-sell market...

M&A activity was soft in the first half of the year, but came roaring back in Q3.

Only 199 stores sold through June 2025, a 38% decline compared to last year.

The reason: Buyers sat on their checkbooks waiting for clarity on taxes, tariffs, and economic policy. And since deals take at least three months to close, that Q4 2024 hesitation killed Q1 2025 activity.

Then, activity accelerated meaningfully in Q3, matching last year's pace.

Source: Haig Partners

Dealership profits also climbed 13% versus Q3 2024, driven almost entirely by fixed ops growth.
And the average dealership is now worth $22.4M in blue sky, up 7.3% from year-end 2024.

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"Dealers have made so much money since the pandemic started," Alan told me. "And the average age of a dealer continues to go up. At some point, we're going to have pent-up demand of sellers."

Alan Haig
Haig Partners

Essentially, two seller types are emerging: families exiting entirely and getting strong valuations, and dealers quietly dumping troubled franchises like Nissan and CDJR before losses pile up.

Meanwhile, private operators are buying stores in their home markets and making opportunistic plays on those distressed brands. At the same time, public groups are back in acquisition mode (Sonic on the West Coast and multiple Lithia transactions come to mind).

Universal learning: Dealers sitting on profitable stores should expect increased buyer competition in 2026 as both private and public groups chase limited inventory. On the other hand, sellers moving now will face tighter bid-ask spreads as more families and distressed operators flood the market.

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Brand winners vs. losers are exposing which OEMs bet wrong on EVs.

By the numbers:

Toyota and Lexus blue sky multiples hit 7.5x and 9-10x respectively.
Korean brands are now at 4.5-6x multiple as dealers regularly make $5M-$10M+ per location.
Meanwhile, Audi sits at 4-5x and Porsche dropped to 8-10x — lower than their historical norms.

Source: Haig Partners

And according to Alan, one of the big contributing factors comes down to EV strategy.

Toyota is executing a "Macy's approach to powertrains"— EV, hybrid, plug-in, gas (whatever customers want).

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"They've absolutely killed it in the market. They're taking share," Alan said.

But VW Group (parent to Audi and Porsche) did the opposite.

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"The Volkswagen group went really heavy towards EVs globally and stopped innovating on the ICE side. It was a bad bet," Alan explained. "Many Audi stores are breaking even. Some are losing money."

And even though Nissan and Stellantis posted their first quarterly sales growth in over a year (up 6.4% and 6.2% respectively), profitability remains a struggle.

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One dealer told Alan his Nissan store is "selling quite a lot of Nissans, but they have these stair-step games going on.”

Translation: This dealer might sell a lot of cars and make little money.

And as far as Ford goes, the brand is falling somewhere in the middle. Some argue there are too many Ford stores, depressing throughput and profitability. But others see opportunity — Ford trades at 3.5-4.5x earnings, attractive for value investors betting the truck franchise stays strong long-term.

Universal learning: Brands that balanced hybrid development with smart EV investment are commanding premium multiples. While distressed brands like Nissan and Stellantis are creating a two-tier market — stores with exceptional management still generate strong profits, but weaker operators are selling at steep discounts.

External forces are driving valuations more than operational performance.

The California Air Resources Board (CARB) mandated 35% of 2026 sales had to be zero-emission, ramping to 51% by 2028. Fourteen states adopted it, but almost no brands were prepared.

The impact: Dealership buyers developed "red state acquisition strategies" to avoid CARB markets entirely.

But then President Trump revoked CARB, and one group that Alan represents saw their blue sky jump 30%. Same stores. Same financials. Sheesh.

At the same time, OEMs are cracking down on broker deals. Brokers (intermediaries who act on behalf of buyers to find and purchase vehicles) are prevalent in specific communities and regions, especially the northeast.

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"[Automakers] don't know who the customer is. The retailer doesn't know who the customer is,” Alan explained. “Sometimes they're not even provided with a lot of the information of the customer."

The problem: This kills long-term revenue. No customer relationship means no service revenue, no parts sales, no loyalty programs, no recall completion.

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As Alan put it: "It makes it more difficult if you're buying a store to know what the real level of demand is."

Universal learning: Dealers relying on broker volume need to build direct retail customer acquisition immediately. And dealers evaluating franchise opportunities must now analyze regulatory exposure and OEM policy risk much more closely.

Over the next 24–36 months…

Expect valuations to swing faster than at any point in modern retail auto history.

The play now is to anticipate where consumer demand, regulatory pressure, and OEM strategy are converging, and buy ahead of the shift. The operators who build future deals around those variables will pick up lucrative assets that look obvious in hindsight.