M&A update: Smaller dealers move in as dealership valuations finally cool off

Buyers are more confident. Sellers are more realistic, and that’s helping both sides agree on value and get deals done. (3 min. read)

Author

Anna del Villar
March 25, 2025

In 2024—the dealership mergers and acquisitions market is entering a more measured phase—with buyers and sellers recalibrating as profits normalize from their pandemic highs.

Why it matters: Younger dealers and smaller groups, long priced out by cash-flush public companies, now have strategic openings to expand their portfolios.

By the numbers: According to Haig Partners’ Q4 2024 report, the dealership M&A market stayed busy last year, with an estimated 510 rooftops changing hands—down 28% from the record high in 2021 but still the fourth most active year on record.

  • The average pre-tax profit per dealership in 2024 was around $4 million, down nearly 37% from the 2022 peak but still two times higher than in 2019.

  • $20.9M was the estimated average blue sky value in 2024, down 14% from 2023 but 122% above 2019 levels.

The big picture: Profits have come down, but the decline is leveling off, per the Haig Report. Buyers are more confident. Sellers are more realistic, and that’s helping both sides agree on value and get deals done.

What they’re saying: "Many dealers who sat on the sidelines waiting for prices to come down are now seeing that opportunities exist," said Alan Haig, CEO of Haig Partners. "Valuations are tough on brands like Nissan and CDJR today, but opportunistic buyers see challenged brands as an opportunity to 'buy low.'"

Zooming in: Public dealer groups have pulled back on U.S. acquisitions, strategically redirecting capital to share buybacks and foreign markets with less dealer saturation.

  • Public dealer groups were only responsible for 5% of transactions in 2024—a big shift from 2021, when the publics executed 30% of deals.

"We continued our focus on closely balancing acquisitions to shareholder return as we see elevated pricing on store acquisitions even as margins normalize compared to our share's current valuations," said Lithia Motors CEO Bryan DeBoer on a recent earnings call. "And as acquisition pricing normalizes, we will actively reassess."

Yes, but this pivot has created a power vacuum filled by private equity-backed dealership groups, entrepreneurial dealers with deep operational expertise, and smaller regional players looking to scale.

One big thing: Asbury's pending $1.3B acquisition of the Herb Chambers Companies earlier this year proves that, while public groups are more selective, transformative deals still attract serious capital.

Bottom line: As valuations stabilize and profits come back to earth, buyers and sellers are finally meeting in the middle.

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