After years of cautious forecasting and adjusting to post-pandemic realities, dealers have signaled a firm shift in sentiment heading into 2026. The 2025 Kerrigan Dealer Survey, released by Kerrigan Advisors, revealed a measurable uptick in optimism regarding profitability and dealership valuations for the first time since 2021. Based on responses from over 525 franchised dealers, the data suggests the industry may have reached a valuation floor in 2024 and is now poised for a rebound in 2026.
A Shift in Valuation and Profit Expectations
For the first time in four years, more dealers expect valuations to increase rather than decrease. While the majority (59 percent) anticipate valuations will remain flat, 24 percent of respondents project an increase in 2026—a 41 percent improvement over last year’s survey. Conversely, only 16 percent expect a decline, marking a significant 52 percent reduction in negative sentiment compared to the previous year.
This improved outlook on blue sky values is directly tied to profitability expectations. The survey indicates that 32 percent of dealers project profits will rise over the next 12 months, a staggering 129 percent increase from last year’s less rosy projections. In 2024, 43 percent of dealers were bracing for a profit decrease; today, the mood has shifted toward stability and growth.
“Dealer optimism is rebounding markedly as we enter 2026,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “These positive expectations for auto retail valuations and earnings are consistent with the improvements Kerrigan Advisors is witnessing in dealer sentiment, particularly as consumer demand, rather than government regulations, drive new vehicle sales, and the industry gains greater clarity on US tariff policy.”
Domestic Brands Rebound, Imports Face Challenges
One of the trends in the 2025 data that seems to mirror the course the industry took throughout the year is the resurgence of confidence in domestic franchises. Every single domestic brand saw an improvement in valuation expectations for 2026. General Motors emerged as a standout performer, with Chevrolet ranking sixth among all franchises for expected valuation increases—a dramatic leap from its 12th-place ranking last year. For the first time, Chevrolet surpassed Hyundai in valuation expectations, signaling a major shift in dealer preference.
Stellantis also saw a notable, though qualified, recovery. While trust levels remain low, the percentage of dealers expecting a decline in CJDR (Chrysler, Jeep, Dodge, Ram) valuations dropped by 26 percentage points, the largest improvement of any franchise in the survey.
In contrast, import brands are facing headwinds. All import franchises, both luxury and non-luxury, saw a decline in their upside valuation expectations. The Volkswagen Group, in particular, experienced a sharp deterioration in sentiment. Nearly half of dealers surveyed (47 percent) reported having “no trust” in the Volkswagen brand, with Audi and Porsche also seeing significant declines in trust metrics. This divergence solidifies that the long-lasting effects of tariffs and other policies favoring U.S. manufacturers will be influencing dealer strategies moving forward.
The Trust Gap: Toyota vs. The Rest
When it comes to trust, Toyota continues to operate in a league of its own. For the third consecutive year, Toyota and Lexus topped the charts, with 86 percent of dealers indicating a high level of trust in the Toyota franchise—more than three times the industry average of 25 percent. This trust correlates directly with buyer demand; Toyota and Lexus remain the most requested franchises for acquisition.
On the opposite end of the spectrum, Nissan continues to struggle. It remains the least trusted franchise, with 64 percent of dealers reporting no trust in the brand. Both Nissan and Infiniti are the franchises most expected to decline in value, with over 62 percent of dealers projecting a drop in 2026. Consequently, buyer interest is virtually non-existent, with only one percent of buyers seeking to add an Infiniti franchise.
Tariffs, AI, and Capital Allocation
The survey also probed specific operational challenges, including the impact of tariffs and the rise of artificial intelligence. Interestingly, 43 percent of dealers reported no impact from tariffs on their business plans. However, for those affected, the response has been to double down on growth rather than retreat. Dealers looking to add dealerships due to tariff impacts outnumbered those looking to sell by an eight-to-one ratio. However, there is a noted pivot in inventory strategy, with fewer dealers seeking to increase new vehicle inventory, opting instead to expand non-tariffed used inventories.
Artificial intelligence has firmly moved from buzzword to business reality. The survey found that 43 percent of dealers are already deploying AI solutions in their operations, with another 47 percent planning to do so. Only 10 percent of respondents have no plans to utilize AI, suggesting that 2026 will be a pivotal year for tech integration in auto retail.
Implications for 2026
While 2025 was a year of uncertainty, there is hope that 2026 will be one of normalcy and growth. Dealers are ready to buy, with 32 percent planning to add at least one dealership in the coming year. However, the days of aggressive multi-store acquisitions may be pausing, as only 14 percent plan to add two or more stores.
As the industry heads into the new year, the divide between high-trust, high-value franchises and those struggling to maintain dealer confidence is widening. For buyers and sellers alike, understanding these brand-specific dynamics will be crucial. The “rising tide” may be returning, but it is lifting some boats much higher than others.
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