Auto dealer M&A activity could hit record levels in 2026 as buyer demand drives up prices for the most sought-after franchises, according to buy-sell advisors.
Flight to quality drives market divergence
The current buy-sell market is a “flight to quality,” as buyer demand concentrates on high-quality brands like Mercedes-Benz, the Presidio Group president said. Kerrigan Advisors founder Erin Kerrigan described the demand for Toyota franchises as “insatiable” during a July 14 webinar hosted by the American International Automobile Dealers Association. Both firms forecast a strong market in 2026, with the potential to reach a record high or rank in the top three.
Buyer interest isn’t limited to luxury or volume imports. High-flying franchises for acquisitions also include BMW, Porsche, and Lexus, along with Honda and Toyota, Kerrigan noted. In the first quarter of 2026, these five brands saw the biggest increase in their share of all buy-sell transactions compared to their average share in all of 2025. BMW’s share jumped 228%, Porsche’s increased 207%, Lexus was up 123%, Honda rose 89%, and Toyota grew by 37%.
This trend creates a distinct “K-shaped” dealership M&A market, where buyer demand drives up the price for the most coveted franchises while other brands struggle. Presidio Group president George Karolis described this dynamic to WardsAuto as a flight to quality in a phone interview July 16, citing a number of transactions specifically for Mercedes-Benz franchises. The market has become bifurcated, with a lot more demand for the high-quality stuff and a lot less of it available, Karolis said.
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Drivers behind the surge in sales
High franchise values are attracting more sellers to the market. The Kerrigan Blue Sky Report for the first quarter of 2026 noted a significant increase in market share for coveted franchises due to record “blue sky” values. These values represent the portion of the price paid for a franchise over and above the value of the physical assets.
Sellers are also facing new risks that contribute to their decision to sell. Kerrigan cited higher gas prices, vehicle affordability issues, and the conflict in the Middle East as factors putting pressure on dealers. Family-owned dealer groups often sell due to succession issues, which remain the No. 1 driver for sellers. The average age of a dealer is over 70, and some lack succession plans.
Presidio Group president George Karolis noted that dealers looking to shed underperforming brands likely contributed to the rise in available inventory. In a dealer survey published June 25, 18% of respondents said they were open to selling dealerships in the next year, up from 11% a year ago. This increase suggests dealers are actively managing underperforming assets while chasing premium valuations for their remaining high-quality brands. The Presidio Group, with offices in the Denver and Atlanta metro areas, estimates there were around 215 buy-sell transactions in the first half of 2026 — a 23% increase vs. the first half of 2025. Those transactions involved about 315 dealerships, versus 215 a year ago. In a Dealership M&A Market Update for the second quarter of 2026, the Presidio Group downgraded its valuation guidelines for Audi and said it’s keeping an eye on a recent rebound by Nissan franchises, compared with long-term, underperforming numbers.
