Sales of certified pre-owned or used vehicles might not have set records in 2025, but the dealership buy/sell market did.

According to the 2025 Blue Sky Report by Kerrigan Advisors released on Tuesday, last year’s transactions reached 458, representing 688 franchises sold. The number marked a 5% increase compared to 2024.

Kerrigan Advisors indicated ongoing buyer demand, strong earnings and the continuing consolidation trend drove last year’s buy/sell activity, resulting in elevated blue sky values.

During the last five years, the firm tabulated that more than 3,500 franchises changed ownership in the U.S. That’s an estimated 15% turnover rate, nearly doubling the pace of the five years preceding the pandemic.

“While buy/sell activity was strong in 2025, the valuation environment is increasingly bifurcated, with high-performing franchises continuing to command price premiums, while lower performing or smaller-scale dealerships face more limited buyer interest,” said Erin Kerrigan, founder and managing director of Kerrigan Advisors. “The leading consolidators are also becoming more precise and strategic with their capital deployment, prioritizing scale within existing markets and targeting high-volume dealerships to drive operational efficiencies, leading to a buy/sell market that is increasingly bifurcated.”

Kerrigan noted that the majority of transactions in 2025 were completed in markets where buyers already had an operating presence, highlighting the increasing importance of geographic consolidation and the more precise acquisition strategies employed by growing dealership groups focused on regional scale.

Other highlights of the report available online included:

—Multi-dealership transactions represented just 22% of last year’s buy/sell market but reached 100 in the absolute number of deals, the third highest on record.

—The Kerrigan Blue Sky Index closed out 2025 at 176, up from 170 in 2024 and 76% above 2019 levels, highlighting sustained franchise valuation strength for most franchises.

—30% of import luxury franchises and 29% of import non-luxury franchises changed hands over the last decade, compared to just 22% of domestic franchises, underscoring the market’s stronger buyer demand for imports.

—Average public dealership pre-tax profits rose 89% to $4.07 million in 2025 above the pre-pandemic average of $2.18 million (2015-2019).

—The U.S. public dealer groups’ blended average blue sky multiple ranged from 6.0 times to 6.4 times throughout 2025, ending the year at 6.3 times.

—Capital allocation to acquisitions of U.S. dealerships rose to 48% in 2025, compared to 29% in stock buybacks, 17% for capital expenditures, 5% for dividends and just 1% for international and other acquisitions.

Geographically, the report indicated the buy/sell market was once again led by the South, where population growth, lower cost of living and favorable business conditions drove strong buyer demand and higher pricing.

In terms of franchises, Kerrigan Advisors noted that domestics rebounded in 2025, representing 51% of the buy/sell market, driven by improving sales performance and stronger projected profitability. Despite this increase, the firm noted that domestic franchises remain underrepresented relative to their overall market share, reflecting continued buyer preference for higher-volume import and luxury brands.

Improved dealership profitability

Kerrigan Advisors also highlighted the strength of the buy/sell market in 2025 stemmed from improving dealership sales and normalized, yet structurally higher, profitability.

The report mentioned new-vehicle sales reached 14.5 million units in 2025, surpassing 2019’s level and driving total industry revenue to a new high. Meanwhile public dealership pre-tax earnings stabilized at approximately $4.07 million per dealership — 32% above pre-pandemic averages — providing buyers with confidence that today’s earnings represent a sustainable floor.

The firm added that fixed operations also remained a key profit driver, with gross profit approaching $5 million per dealership, supported by an aging vehicle fleet and increased service demand.

Kerrigan Advisors went on to mention used-vehicle fundamentals also began to improve as rising lease maturities are expected to replenish supply, supporting transaction volumes and dealership profitability in the coming years.

Kerrigan Advisors managing director Ryan Kerrigan explained that these factors together reinforce the view that current earnings represent a structural baseline rather than a temporary peak.

“The industry’s earnings performance remains exceptionally strong, fueling buyer demand for dealerships and sustaining the pandemic era seller’s market, particularly for the top franchises,” Ryan Kerrigan said.

“Many dealers continue to benefit from OEMs’ more disciplined inventory levels, higher new-vehicle margins and robust fixed operations growth, all of which are contributing to sustained profitability above historical norms,” he added.

AI’s impact on the buy/sell market

According to the report, some long-time dealers are considering a sale, driven in part by fatigue with the accelerating pace of technological change, particularly the rapid emergence of artificial intelligence.

Kerrigan Advisors said AI “will undoubtedly require another re-imagination of the dealership operating model.

“For many long-tenured dealers, the capital requirements, operational re-engineering and execution risks associated with AI-driven retailing are daunting and prompting their decision to sell,” the firm added.

Adding to the technology matrix, Carvana’s expansion into the new-vehicle market, including the addition of six Stellantis franchises in the last 12 months,

Erin Kerrigan sees Carvana’s moves with those stores underscores the rapidly shifting impact of technology in auto retail, especially with that company claiming its personnel expense as a percentage of gross profit is half the industry average while its revenue per rooftop is more than seven times higher.

“While the disruption ahead concerns some dealers, it is ultimately more likely to produce a structurally stronger and more profitable auto retail sector for growing dealer groups,” Erin Kerrigan said.

“Well-capitalized consolidators are leaning into this transition with disciplined acquisition strategies. For them, industry transformation represents opportunity, not threat, and will be the key driver of continued consolidation in 2026 and beyond,” Kerrigan went on to say.

Blue-sky multiple and outlook adjustments

In the fourth quarter, Kerrigan Advisors made several adjustments to its blue-sky multiples and outlooks.

The firm explained these adjustments reflect improving OEM performance, disciplined inventory management and sustained demand for high-performing franchises.

In the non-luxury segment, Kerrigan Advisors increased four blue-sky multiples — Honda, Chevrolet, Ford and Buick GMC — reflecting improved buyer demand driven by stronger projected future earnings.

In the luxury segment, Kerrigan Advisors increased three blue-sky multiples — Lexus, BMW and Cadillac — driven by strong profitability, disciplined inventory management and sustained buyer demand for high-performing luxury brands.

“Blue-sky multiples continue to expand as buyers concentrate on the strongest franchises,” Erin Kerrigan said. “Capital is increasingly flowing to brands with consistent sales momentum, disciplined operations and consistent earnings, reinforcing valuation strength at the top end of the market.”