A swatch of OEM executives expect their dealer networks to shrink, buy-sell activity to stay busy, and that they, not dealers, will bear the brunt of tariffs, according to a recent survey.
Driving the news: About 150 manufacturer executives were surveyed from December 2025 to June 2026 for the fourth-annual Kerrigan OEM Survey 2026.
The survey targets manager-level executives and up, Erin Kerrigan, managing director of Kerrigan Advisors, told CDG News.
“Our database has every single OEM, and we get about 155 responses," Kerrigan said. "It's anonymous, but I'd venture to guess that virtually every non-Chinese OEM is represented.”
Erin Kerrigan
Kerrigan Advisors
Shrinking networks: Nearly half (45%) of the executives expect to have fewer dealers in their networks in five years, an increase of 12 percentage points from 33% in 2025.
Related, OEMs' planned use of the right of first refusal (ROFR) nosedived from last year: Only 8% plan to ROFR more than 25% of transactions, down from 28% in 2025.
And, 14% do not intend to ROFR any transactions.
(Possibly a sign that consolidation is doing the work for them.)
Kerrigan said the drop could be attributed in part to pricing, especially because the “the top franchises are getting so lofty.”
“It's harder for them to execute a ROFR, because they have a harder time finding a buyer willing to pay the same level of dollar amount, in my experience…,” Kerrigan said.
Buy-sells still bustling: For the first time, Kerrigan Advisors asked OEM executives directly about their buy-sell expectations.
Thirty-five percent expect more transactions over the next 12 months, while 53% expect activity to hold at today's elevated pace, and just 12% project fewer deals.
In other words, 88% expect the market to hold the line or get busier.
Kerrigan said they added the question because the OEMs have direct visibility into the buy-sell pipeline.
“While we track historical buy-sell activity, the OEM sees the approvals coming in,” Kerrigan said. “So they have a pretty good purview into projected activity and closings.”
Valuable assets: Blue sky values are looking good, too, according to the respondents.
61% of executives expect values to stay the same, and 21% expect an increase.
On the other hand, 18% anticipate a decrease, which is down four percentage points from the 22% who expected a decline in 2025.
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AI and profitability: OEM executives are increasingly bullish on the impact of AI.
59% expect AI to increase dealership profits over the next five years
37% expect no change, and 4% anticipate a decrease.
This fits with the findings in Kerrigan Advisors' 2025 Dealer Survey: It found 90% of dealers are already using AI or plan to do so.
Strike a pose: Image is everything, and the executives do predict activity on their buildings.
31% of executives project an increase in facility requirements over the next five years, up six percentage points from 25% in 2025
61% expect current standards to hold and just 8% anticipate a decrease.
Separately, 43% said their organization will require a new image facility of dealers within five years.
Sales, supply, and tariffs: The executives were split on tariff exposure, inventory and margins. More than three-quarters expect flat or rising new vehicle sales.
Specifically, 77% expect new vehicle sales to stay flat or rise over the next 12 months; those expecting a decline rose to 23%, up from 18% in 2025
58% expect OEMs to absorb the majority of tariff costs, 37% expect consumers to carry it, and 5% expect dealers to shoulder it.
38% expect a 30-60 day inventory supply over the next year, up 11 points from 27% in 2025; 52% project 60-90 days and 10% expect 90-plus days
56% expect new vehicle margins to normalize back near pre-pandemic levels, up from 48% in 2025
Executives also expect EVs to make up 21% of sales within five years. That’s more than double today's market share of about 8%.
Looking ahead: Kerrigan expects consolidation to continue at a fast clip, as long as OEMs keep favoring fewer, larger, better-capitalized dealers over franchise expansion.
She said only a major shift in the retail model, think like a Carvana-style unit snapping up a big market share, would slow it down. In that scenario, a dealer covering a broader area with a single franchise would need fewer stores to compete.
“I think we are rapidly entering a world in which dealers need to focus on growth, both on a rooftop level in terms of growing the revenue, and market share of each of their stores,” Kerrigan said. “And also consider expansion within their markets so that they have the scale to compete effectively in a rapidly consolidating industry.”
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