Presidio’s latest publication highlights dealership profitability, M&A market prospects, the new tariff policy’s possible impact on dealers and the role of AI in auto retail.
DENVER/ATLANTA — May 6, 2025 — The Presidio Group’s latest issue of Presidio Perspectives: A Quarterly Outlook on Auto Retail and M&A Trends highlights rebounding dealership profits, a robust 2025 outlook for buy-sell transactions and artificial intelligence’s growing influence in the auto retail sector and explores how new tariff policy could affect dealers and the broader U.S. auto industry.
The report found that the pace of dealership buy-sell transactions slowed during the first quarter of 2025, to an estimated 82 transactions involving 106 stores. That was down from 90 transactions involving 175 dealerships recorded for 2024’s first quarter.
Presidio President George Karolis attributed the slowdown to a hesitation in dealmaking late last summer and fall, in part because of the uncertainty about the regulatory and business environment heading into the 2024 presidential election. While that hesitation thinned out the concentration of deals set to finalize in early 2025, momentum has since returned to the market, and Presidio’s own pipeline of transactions in the works is strong.
“The appetite for well-positioned acquisitions remains robust,” Karolis said. “We expect that acquisitive dealers will have plenty of opportunity to add to their portfolios through the remainder of 2025, driving further consolidation in the industry.”
Presidio updated its 2024 transaction data as additional deals came to light. Presidio has now tracked 390 deals involving 559 dealerships for 2024, close to 2023’s final tally of 384 transactions involving 582 stores.
In addition to insight on the dealership buy-sell market, Presidio’s first-quarter report includes detailed data from the Presidio-NCM Average Dealership Performance Benchmark. Pretax profit for the average dealership rose 3.7% in the first quarter, the first meaningful increase in three years. Performance varied across brand segments, however — the average luxury store climbed 18% and the average import store rose 6.1%, while the average domestic store slipped 4.8%.
The average store is now performing far better than before the pandemic, with a profit 1.8 times 2019’s level. The improvement meant the Presidio-NCM Average Dealership Profitability Index rose to a score of 180 for the first quarter, surpassing its mark of 173 at the end of 2024. The index was introduced in late 2024 as a tool to track profitability for the average store going back to a pre-pandemic baseline of 2019.
The uptick could indicate that dealership performance has stabilized after years of declining profitability and pandemic-induced volatility. But lasting stability will be tested by new uncertainties, namely, President Donald Trump’s sweeping tariffs.
Tariff threats played a role in the first-quarter results with vehicle sales surging in March as buyers tried to get ahead of expected higher vehicle prices. But sales volume could fall later this year if new-vehicle inventory levels end up being constrained by the new tariffs. The Presidio Group accordingly has revised its 2025 U.S. new-vehicle sales projection from 16.2 million to 15.4 million vehicles.
“The first quarter of 2025 represents a critical inflection point for franchised dealers as demonstrated by the improvement in the Dealership Profitability Index,” Karolis said. “After years of volatility, we’re seeing profit performance stabilize and even trend higher, which could signal a new operational normal more robust than pre-pandemic levels. The ongoing tariff dynamics add complexity, but they’re also revealing dealers’ resilience and adaptability in managing market uncertainties.”
Among other highlights in this issue:
Presidio Director of Research Kevin Tynan shares insight on how a “tariff pandemic” could drive vehicle prices higher and expand dealer margins should supplies be constrained like they were during the COVID-19 crisis.
The role AI will play in auto retailing is detailed in the report’s technology snapshot. A burst of investment and interest in AI-supported software tools has positioned the technology to reshape how dealerships interact with customers and drive operational effectiveness.
Dealer associations are actively challenging direct-to-consumer sales models such as Volkswagen AG’s plan to retail its revived Scout brand directly instead of using dealers. in the report’s disruption section, National Automobile Dealers Association CEO Mike Stanton defended the franchised dealer model as more cost-effective than direct sales models.
To read the full report and register for future publications, go to: https://thepresidiogroup.com/news-insights/#quarterly-report
About The Presidio Group LLC
The Presidio Group was founded in 1998 with the simple mission to relentlessly put the interests of our clients first. By steadfastly adhering to this philosophy, the firm has earned the trust of clients throughout the United States. During their careers, the professionals at Presidio have collectively done nearly 290 transactions for almost $19.0 billion. The Presidio Group, based in Denver and Atlanta, publishes Presidio Perspectives: A Quarterly Outlook on Auto Retail and M&A Trends, a leading source of information about the automotive retail landscape. Presidio Merchant Partners LLC is a subsidiary of The Presidio Group LLC and is a member of FINRA and SIPC. For more information on Presidio, visit www.thepresidiogroup.com.