After four years of caution, new survey data suggests U.S. auto dealers are reassessing risk, valuation, and growth, hinting at a more selective but confident market heading into 2026.
Kerrigan Advisors’ latest dealer survey points to a notable shift in mood across U.S. auto retail, with 2025 marking the first year since 2021 in which optimism about profits and franchise values outweighs pessimism. That change matters less as a snapshot of sentiment than as a signal that dealers may believe the sector has passed a cyclical low after years of margin pressure, volatility, and policy uncertainty.
The data suggests confidence is returning gradually rather than exuberantly, with most dealers expecting stability rather than sharp growth, and a smaller but meaningful share anticipating valuation gains. That balance hints at a more disciplined phase for the industry, one in which expectations are tempered by recent experience but no longer dominated by defensive thinking. Rising acquisition interest reinforces this view, as expansion plans typically reflect longer-term confidence rather than short-term relief.
External pressures still loom, but their perceived impact appears more limited than in recent years. Tariffs, infrastructure mandates, and electric vehicle investment requirements continue to influence decision-making, yet many dealers report these factors as manageable rather than existential threats. The survey’s findings suggest that clearer policy signals and slowing EV adoption have allowed dealers to reassess capital commitments with greater caution and selectivity.
Technology adoption offers another lens into the industry’s evolving priorities. Artificial intelligence has moved quickly from experimentation to operational use, with most dealers either already deploying it or planning to do so. This shift reflects an industry seeking efficiency gains and cost discipline, particularly as labor pressures and inventory complexity remain persistent challenges.
Perhaps most revealing is how sharply sentiment diverges by franchise. Trust in manufacturers, alignment on inventory strategy, and perceived profitability now appear central to valuation expectations, with domestic brands showing renewed strength and certain import franchises facing skepticism. As dealers prepare for 2026, the survey suggests the next phase of auto retail will reward consistency, transparency, and operational realism, favoring those brands and operators able to adapt without overextending in an uncertain economic landscape.
