Kerrigan survey finds US dealers upbeat on profitability and acquisitions

Dealers anticipate modest gains in valuations and profitability, with domestic franchises outperforming imports and AI adoption increasing.

On the Dash:

• The Kerrigan Advisors Dealer Survey finds that dealer valuations are improving, with 24% expecting increases and only 16% expecting declines in 2026.
• Domestic brands outperform imports, with Toyota, Lexus, and Kia leading in trust and projected valuation gains.
• AI adoption is growing, with 43% using AI and 47% planning future deployment to drive dealership performance.

The seventh annual Kerrigan Advisors Dealer Survey reveals U.S. auto dealers are cautiously optimistic about business performance and valuations in 2026. Most dealers expect little change to their business outlook or dealership valuations, but positive trends are emerging.

Nearly a quarter of dealers anticipate valuation increases this year, marking a 41% improvement from 2025. Only 16% expect declines, down 52% from last year. This is the first year since 2021 that more dealers project gains rather than losses. Profit expectations are also up, with 32% of respondents expecting higher earnings, a 129% jump from 2025, while 20% forecast declines.

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Dealers’ growth plans reflect renewed confidence. Sixteen percent of respondents plan to acquire additional dealerships in response to tariffs, compared with just 2% intending to sell. Most expansions focus on tuck-in acquisitions within existing markets, while fewer dealers aim to add multiple franchises.

Artificial intelligence adoption is accelerating, with 43% of dealers already using AI and 47% planning future deployment. Kerrigan Advisors anticipates AI will significantly impact the industry in 2026 and beyond.

Franchise valuations show a clear divide between domestic and import brands. Domestic brands, including Toyota, Lexus, Honda, Kia, Subaru, and Chevrolet, lead in valuation gains and trust, while import brands such as Nissan, Volkswagen, Volvo, and Infiniti are expected to decline. Toyota and Lexus remain the most trusted franchises, with trust levels more than three times the industry average.

Stellantis brands, particularly CJDR, posted the largest valuation improvements among domestics, though trust levels remain low. Hyundai’s performance diverged from its sister brand Kia, which ranks third for expected valuation gains. Volkswagen Group brands—Volkswagen, Audi, and Porsche—saw significant declines, with nearly half of dealers reporting low trust in Volkswagen and increased projections of valuation losses for Audi and Porsche.

Tariffs had a limited effect on dealer operations, with 44% reporting no impact. Dealers are more cautious about capital investments and new-vehicle inventory, prioritizing used-vehicle inventory instead.

The 2025 Kerrigan Dealer Survey collected responses from over 525 dealers, measuring business outlook, valuation expectations, franchise trust, acquisition intentions, and emerging trends such as AI and tariffs.