While dealership buy-sell transactions were down for the third year in a row, the market had one of its most active years ever in 2024, according to the latest data from Haig Partners.

The buy-sell advisory firm’s Q4 2024 Haig Report also found dealership profits remained elevated, while blue sky values dipped but still topped $20 million.

The report showed last year was the fourth-busiest in auto retail M&A history, with 510 rooftops changing hands. That’s down from 528 in 2023 as the market continues to come off its 2021 peak of 707.

Haig Partners said 2024’s sales included the highest prices ever paid for BMW, Honda and Kia dealerships. Those deals helped push the average estimated blue sky value for publicly traded dealerships to $20.9 million in 2024, down 14% from the previous year but 122% more than the last pre-COVID year of 2019.

Dealership profits also held far above the pre-pandemic norms, with the 2024 average pre-tax profits of $4.0 million roughly doubling that of 2019.

“Dealership M&A remains remarkably strong despite evolving economic and political conditions,” Haig Partners president Alan Haig said. “While profits have come off their record highs, they are still nearly double pre-pandemic levels and buyers continue to aggressively pursue dealerships.”

While acknowledging the uncertainty of the current landscape, with tariffs looming, consumer confidence shaky and the potential for inflation on the horizon, Haig said he expects dealership values to remain high, as profits continue to hold up and demand is strong.

“The offers our clients are accepting so far this year prove sellers can still command attractive valuations,” he said, “especially those with top-tier franchises.”

At the top of that top tier, the report said, are Toyota, Mazda, Chevrolet and Buick-GMC stores, whose blue sky multiples increased as a result of those brands’ strong performance.

Other strong brands highlighted by the report include BMW, Mercedes-Benz and Lexus among luxury vehicles and Subaru and Kia in the mass market, with Haig Partners noting Subaru’s “U.S.-centric production balance” insulates it from tariff risks.

Among the brands on the down side are Chrysler-Dodge-Jeep-RAM and Nissan, but the report said even those have a potential upside as dealers have said they have hit bottom and could be “smart buying opportunity for dealers seeking a value-priced franchise.”

Alan Haig said, “Valuations are tough on brands like Nissan and CDJR today, but opportunistic buyers see challenged brands as an opportunity to buy low.”

The report found private buyers, including a growing number of private equity-backed dealership groups, dominating the M&A market, accounting for 95% of dealerships acquired, with public groups seeking opportunities outside the U.S. auto retail sector.

But, it noted, as the trend toward market consolidation continues, public dealership groups will also be acquiring more dealerships. As an example, the report cited Asbury’s pending acquisition of the largest group in New England — Herb Chambers Companies and its 33 dealerships.

“Consolidation is happening at every level of the industry,” Alan Haig said. “We continue to see strong activity from family-owned dealership groups, private equity-backed buyers and public retailers expanding their portfolios.

“Dealership owners considering an exit have a window of opportunity to capture strong valuations before market conditions shift.”

Looking ahead, Haig Partners expects another strong year for buy-sells in 2025, dealership profitability high, owners evaluating long-term exit strategies and public groups returning to U.S. acquisitions while private dealers seize opportunities in underserved or undervalued markets.

“Many dealers who sat on the sidelines waiting for prices to come down are now seeing that opportunities exist,” Alan Haig said.

The full report is available here.