The auto retail market was relatively strong in Q3, with dealer profitability up about twice pre-pandemic levels and store mergers and acquisitions running at strong, above-normal levels.
The details: After a relatively soft first half, the retail market rebounded strongly in the third quarter, showing signs of stabilizing in key areas compared to Q3 2024.
According to the latest quarterly Haig Report, 149 stores changed hands last quarter. And roughly 600 stores are expected to trade hands this year—a near-record high.
The average dealership “blue sky” value is $22.4 million, up 7% from the end of 2024 and way above pre-pandemic numbers.
Profits per store jumped 13% in Q3 vs. last year, thanks to booming service and parts sales, even as car sales margins slipped.
Why it matters: Even as the market cools from peak-pandemic highs, dealership profits and “blue sky” values remain well above pre-COVID levels, fueling a sustained wave of store buyouts. That means more consolidation, bigger dealer groups with greater pricing power and scale, and fewer independent stores left on the sidelines.
Via Haig Partners
Between the lines: Some brand stores fared better than others in Q3—with winning premium brands drawing major buyers and some challenged brands selling at a discount.
Premium brands (Lexus, Toyota, BMW) are in huge demand—sometimes with buyers paying record prices.
Brands like Nissan and Chrysler-Dodge-Jeep-Ram (CDJR) are selling at a discount; buyers with turnaround plans see opportunity.
Public dealer groups still buy—but most action is from private buyers, especially regionally and for mid-size deals.
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Also worth noting: The retail market is being shaped by several factors, spanning regulatory shifts to supply chain issues.
After the Trump administration revoked CARB emissions waivers, stores in those states became more attractive—boosting blue-sky values by up to 30% in some deals.
Key federal EV tax credits expired; brands with strong EV and hybrid lineups saw a Q3 sales bump, with Cadillac and BMW among the standouts, but it's likely temporary.
Supply chain issues (like aluminum plant fires and chip shortages) still disrupt some production and dealer inventory.
Service departments and finance/insurance sales are the main profit engines now, not just vehicle sales—with fixed ops gross up 8.3%.
Bottom line: Auto retail is settling into a high-profit “new normal,” with more realistic sellers, confident buyers, and brisk M&A as money chases the best-run, best-branded stores in a more mature but still very active market.
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