Strategic Dealership Consolidation in U.S. Auto Retail: How M&A Advisors Are Reshaping Value Creation

The U.S. automotive retail sector is undergoing a seismic shift as dealership owners grapple with declining profit margins, evolving consumer preferences, and the lingering effects of the post-pandemic "Great Normalization," according to a Presidio Group Q4 report. In this environment, strategic consolidation has emerged as a critical tool for survival and growth. At the heart of this transformation are M&A advisors like The Presidio Group, whose expertise in navigating complex transactions is enabling both public and private stakeholders to unlock value through targeted dealership acquisitions and operational synergies.

The Role of M&A Advisors in Value Creation

M&A advisors are no longer mere facilitators of deals; they are strategic partners in reshaping the automotive retail landscape. As highlighted by a Presidio Group Q2 report, these firms bring specialized knowledge to identify synergies, optimize capital structures, and align business strategies in an increasingly fragmented market. For automotive dealerships, which often operate as family-owned enterprises with limited resources for scaling, advisors like Presidio offer a bridge to institutional expertise.

The Presidio Group, in particular, has positioned itself as a key player in this space. Its Q4 2023 report underscores a 20.4% decline in net pretax profits for franchised dealerships in 2023, a trend that has accelerated as the industry returns to pre-pandemic norms, according to the Presidio Group Q4 report. Yet, despite this erosion, 2023 profits remain 2.5 times higher than 2018 levels, illustrating the sector's underlying resilience. Advisors like Presidio are helping stakeholders capitalize on this duality by prioritizing high-margin, premium-brand dealerships in growth markets.

Case Studies: Presidio's Impact on Stakeholder Value

The Presidio Group's influence is best understood through its recent transactions. One notable example is the sale of two Mercedes-Benz dealerships-Mercedes-Benz of Jackson (Mississippi) and Mercedes-Benz of Collierville (Tennessee)-to Lithia Motors, Inc. in June 2025, as reported in a Business Wire release. These dealerships, part of a family-owned business, were sold to leverage Presidio's deep experience in luxury automotive transactions. The deal marked Lithia's fifth acquisition facilitated by Presidio, with cumulative revenue from these transactions exceeding $4 billion. For the Higginbotham family, the sale represented a strategic exit that preserved legacy while maximizing value in a competitive market.

Another landmark transaction was the $1.45 billion acquisition of 33 Herb Chambers dealerships by Asbury Automotive Group in 2025, as noted in the Presidio Group Q2 report. This deal, facilitated by Presidio, exemplifies the "flight to quality" trend, where buyers prioritize high-performing brands and dealerships in expanding metropolitan areas. By consolidating these premium assets, Asbury enhanced its market share in luxury segments while reducing operational redundancies-a win for both public and private stakeholders.

Market Trends and the Future of Consolidation

The Presidio Group's Q2 2025 report reveals a surge in M&A activity, with the firm closing 15 transactions in the first 10 months of the year-12 of which involved dealership acquisitions, as noted in the Presidio Group Q2 report. This momentum is driven by two key factors: the need for operational efficiency and the appeal of high-value markets. For instance, dealerships in Florida and Texas, which account for a disproportionate share of U.S. automotive sales, are becoming prime targets for consolidation.

Moreover, the "flight to quality" strategy is reshaping valuation dynamics. Buyers are no longer chasing volume but instead focusing on dealerships with strong EBITDA margins, digital transformation capabilities, and customer retention metrics. This shift has created a feedback loop: as top-performing dealerships command higher valuations, sellers are incentivized to improve operational metrics before entering the market-a process Presidio actively supports through pre-sale optimization.

Conclusion

Strategic dealership consolidation is no longer a reactive measure but a proactive strategy for value creation in the U.S. automotive sector. M&A advisors like The Presidio Group are pivotal in this evolution, offering the expertise to navigate declining profit margins, align stakeholders, and execute transactions that enhance long-term profitability. As the industry continues to consolidate, the role of these advisors will only grow in importance, ensuring that both public and private players can thrive in an increasingly competitive landscape.