Dealerships changed hands last year like a bumper crop of used cars, setting a new buy-sell record, according to Kerrigan Advisors, which also expects strong transaction activity this year.

The sell-side adviser’s 2024 Blue Sky Report shows a 10% uptick in buy-sell deals to 438 transactions. The activity involved 697 franchises, the highest number since 2021 and up about 3% year-over-year. Among them was Holman’s purchase of 28-franchise Leith Automotive in North Carolina.

Transactions rose along with an upbeat industry outlook as the Federal Reserve started to cool down interest rates due to moderating inflation. Those developments combined with increased inventories to buoy consumer confidence last year, Kerrigan points out. 

Strong annual sales presented the possibility of eclipsing the nearly 18 million-unit seasonally adjusted annual rate record in 2016, the report says. In fact, 2024 dealer profits, at $2.7 million pretax per dealership, were up sharply from prepandemic levels, Kerrigan says.

The firm expects consolidation to continue apace this year, fueled by an accumulation of more than $250 billion in profits since the pandemic – or nearly 2½ times that earned in the five years before it. For starters, Asbury Automotive Group agreed to acquire the Herb Chambers group last month.

Average dealership values are historically high, albeit under their apex, says Kerrigan, which indicates many dealers expect values to keep rising this year along with earnings. 

It acknowledges the wild-card factor of the trade war that erupted this month, and Kerrigan is also watching the cloud of Chinese automakers’ increasing worldwide market share.