The Presidio Midyear 2025 Dealer Direction Survey revealed a cautiously optimistic outlook from U.S. auto dealers. Even as the industry navigates economic turbulence and the ongoing effects of federal tariff policies, dealers are much more bullish than they were just a year ago.
72 percent of dealers surveyed expressed confidence that profitability would stay the same or improve over the next 12 months. This marks a notable rise from 65 percent at the end of 2024 and reflects a rebound from steeper pessimism in mid-2024 when only 37 percent of dealers were optimistic. Much of this confidence is attributed to stabilization in dealership profitability after significant pandemic-related fluctuations.
“Once tariffs and economic uncertainty [is] absorbed, consumers will be more willing to purchase new vehicles,” one survey respondent said. “Better new vehicles on the way will also stimulate sales. More [units in operation] will result in more labor and parts sales for fixed operations.”
According to the Presidio-NCM Average Dealership Performance Benchmark, franchised dealerships saw a gain in pretax profits during Q1 2025 for the first time since before the pandemic. However, long-term concerns do still persist due to rising costs, automaker margin policies, and regulatory uncertainty. Dealers acknowledged that much of the optimism hinges on how new tariff policies will impact costs and consumer demand.
Dealership Values Strengthen
Conducted between May 15 and June 13, the Presidio survey gathered insights from 182 dealers representing nearly 3,000 franchised stores to provide a distinct snapshot of current sentiment on dealership value. The survey found that 75 percent of respondents expect dealership values to remain stable or increase over the next year, up from 64 percent at the end of 2024. Continued consolidation across the industry and a reduced number of active dealerships are credited with driving valuations higher. However, geographic location and the specific brands represented continue to play a pivotal role in determining individual dealership value.
“Auto generates substantial cash flows and many [private equity] firms and investors want cash generating businesses, so expect demand will remain strong,” said one dealer. “It is all about horizon when valuing deals.”
There is a seller’s market for high-demand brands, with only nine percent of dealers expressing an interest in selling a dealership over the next 12 months, while nearly two-thirds indicated plans to expand through acquisitions. Beyond generating returns on investment, a growing number of dealers cited the desire to create opportunities for future generations or key operational talent as a primary driver behind buy-sell activity.
Brand Desirability Shifts in Response to Market Pressures
There were significant changes in brand desirability throughout 2025, particularly among luxury European automakers facing tariff challenges. For the first time, Porsche dropped out of Presidio’s “Magnificent Seven” group of top brands, falling from seventh to eighth place. Similarly, Jaguar-Land Rover and Audi showed declines, illustrating the mounting pressures on brands with limited U.S.-based assembly capabilities.
“In addition to its challenging inventory allocation system and expensive facility demands, tariffs are a big contributor to the declining view of Porsche, which has no U.S. production capability,” said George Karolis, president of The Presidio Group. “While still highly desirable among buyers, whether Porsche recovers its previous heights could depend on how tariffs play out.”
By contrast, brands like Toyota, Lexus, and Honda retained their top rankings, with BMW and Mercedes-Benz gaining ground thanks to their large U.S. assembly operations. Kia is the brand that took Porsche’s spot in seventh place as it continues a respectable showing over the past few years. The South Korean Manufacturer had placed in eighth in four consecutive surveys.
Tariffs Remain the Biggest Issue
While optimism is on the rise, tariffs are still a key challenge casting a shadow over an otherwise improving outlook. Roughly 61 percent of respondents said U.S. tariff policies are expected to have a negative effect on their business. Dealers voiced concerns over the rapid implementation of tariff changes, with little time for supply chains to adjust.
“The global supply chain doesn’t change in 90 days,” said one dealer. “Factories can’t be built overnight.” Another dealer noted that while higher tariffs might yield long-term benefits, the current implementation is “causing way too much disruption in our business today.”
Clear Skies Ahead?
While uncertainty remains, the Presidio survey shows that the automotive retail sector is adapting to shifting market dynamics better than many feared a few months ago. Dealers are optimistic yet wary. Tariffs and geopolitical shifts are creating roadblocks, but the demand for quality brands and operational excellence remains as strong as ever.
The next 12 months will likely continue to test the resilience of dealers, but with solid profitability trends, stable valuations, and strategic opportunities for consolidation, the industry appears poised to hold its ground as it navigates an ever-evolving tariff landscape.
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