Private dealership groups accounted for more than 83 percent of the dealership acquisitions in the first quarter, but public groups may be showing signs of growth, albeit modest and with caution.

That’s according to The Kerrigan Quarterly Blue Sky Report released this week, which said overall buy/sell activity among U.S. dealerships shot up 60 percent in Q1.

There were 48 dealership acquisitions in the first quarter, up from 30 in the same period of 2013. Forty of those purchases were made by private dealer groups, the report said, but the recent move by Lithia Motors to buy DCH Auto Group may spur additional growth among its public peers.

That does, however, come with a bit of a caveat.

“Private companies continued to dominate the market in Q1, although public company activity rose slightly during the quarter and will likely continue to pick up after the announcement of Lithia’s acquisition of DCH,” said Erin Kerrigan, founder and managing director of Kerrigan Advisors

“The publics, however, are being very disciplined with their capital allocation. If they believe the better investment is their own stock, they are choosing a stock buyback over an acquisition. In the first quarter, collectively, they chose to spend 70 percent more on their own stock than on U.S. acquisitions.”

More specifically, the public groups spent $96 million to buy dealerships in the U.S. during Q1, which was a 9-percent year-over-year increase, according to the report. However, compare that to the $163 million they spent on stock buybacks.

Not to mention, the report indicates that public dealerships allocated just 24 percent of their capital in Q1 to acquisitions (19 percent domestic, 5 percent international), compared to 40 percent in full-year 2013 (25 percent domestic, 15 percent international).

“This spending level is still lower than pre-recession levels,” the report said, referring to the $96 million spent on U.S. dealerships in Q1. “However, if Lithia’s acquisition of DCH closes in 2014, it would likely bring total US acquisition spending back to pre-recession levels for the year.”

The report later added: “Kerrigan Advisors continues to be surprised by the lower than expected acquisition activity by the publics, particularly given their record access to capital for acquisitions.

“We were pleased to see Lithia break the mold in June with the announcement of a $362.5M acquisition and hope this is an indication of a future increase in public acquisition activity.”