Local car dealerships are growing and dying amid the rise of big car retailers

Derek’s father Sylvester built the family’s original Chevrolet dealership with his bare hands on Main Street in rural Pikeville, Pennsylvania, in 1972.

The store and family have been a pillar of the village, just outside Scranton, ever since. That was until late last month, when Sylvester and his family struck a deal to sell Sylvester Chevrolet to a New York-based dealer group.

“As a family, we decided this might be the right time,” said Sylvester, 67, who was considering retirement. “Unless you’re a bigger store, a much bigger store, it’s going to be a little harder to make money. … It’s just volume.”

Several Sylvester family members plan to continue working at the dealership, but he said they do not feel they are in a position to continue running the business amid the rapidly changing auto retail landscape in the United States. The industry faces disruptive adoption of fully electric vehicles, technological shifts such as artificial intelligence, and growing demand from automakers.

Dealership sales like Sylvester Chevrolet’s are happening across the country at a rapid pace as the car dealership business, once considered the purview of convenience stores, has evolved into a lucrative trillion-dollar industry rife with mergers that has drawn more attention from Wall Street and investors in recent years.

While the National Automobile Dealers Association, or NADA, reports that the vast majority of its U.S. franchised dealers are small business owners like Sylvester with fewer than six stores, the country’s larger retailers have grown significantly.

The top 150 dealers sold 27% of all new retail and fleet vehicles in 2025, up from 24.3% in 2021 and 21.2% in 2015, according to Automotive News magazine’s annual ranking of the top auto retailers. They also owned nearly a quarter of dealerships last year, up from less than 20% a decade ago, according to the trade publication.

Meanwhile, top publicly traded traders like Lithia Motors and Automatic nation Their market value has swelled by more than $6 billion each. Even online used car retailers Carvana — with a market capitalization of $74 billion, which exceeds that of most auto companies from which it sells cars — it quietly began buying up new car franchises without disclosing its future plans.

“There’s a lot of money that wants to come into the industry,” Brian Gordon, president of agent and broker advisor Dave Cantin Group, told CNBC. “In general, the industry is kind of aligned on how to evaluate these things. That creates a good climate for it.” [mergers and acquisitions]”.

Multibillion-dollar dealerships have been on the rise amid decades-long consolidation that has led to a grow-or-die mentality for many U.S. auto retailers.

NADA, a trade association representing franchise dealers, reports that the average dealership owner has between two and three stores, but the biggest area of ​​growth over the past decade has been in mid-sized dealerships with between six and 25 stores.

NADA reports that 90.5% of its roughly 17,000 merchants have between one and five stores, down from 94.4% in 2016. Meanwhile, 0.2% of merchants own 50 or more stores, up from 0.1% during that time frame.

“It’s clearly a consolidating industry, and it’s an industry that will continue to consolidate,” Gordon said. But he added that this is happening at all levels, especially expanding small stores to include larger players.

Dave Cantin Group — an advisor to Matthews Automotive Group, the dealer group that acquired Sylvester Chevrolet — conducts dozens of such deals a year and said it expects the pace of mergers, mergers and acquisitions to continue to increase this year.

Matthews Automotive Group is one of several regional dealerships that have decided to expand. The family-owned company began in Vestal — in central New York, south of Syracuse — in 1973 with a single Chrysler-Plymouth store, which has grown into a nearly $800 million enterprise with 18 locations and 800 employees.

Rob Matthews, second-generation owner and CEO of Matthews Automotive Group, said the company’s decision to grow continues and that it aims to be more profitable and better compete in its current markets of New York and Pennsylvania.

“I think that’s definitely a competitive advantage. I think staying static is probably not the best play. You’re seeing continued range,” Matthews said. “The trend is that you will continue to see consolidation to allow you to remain competitive.”

That’s also why Sylvester said he wants to sell his business, with stipulations about retaining the store’s dozens of employees — something that’s part of Matthews’ strategy when acquiring a store.

“There are a lot of things that we see that we can really open a store like his, given the size of our business,” Matthews said. “I think, honestly, it’s exciting in the sense that we’re just looking to give them more tools and hopefully allow everyone to work moving forward.”

Wall Street has noticed how profitable and protected franchise dealerships are in the United States. The franchised dealer system, which exists to sell new cars to consumers rather than having automakers sell their cars themselves, is unique and highly regulated.

“I believe there is endless upside. And the opportunity for growth in our company is endless.” Sonic cars President Jeff Dyke told CNBC during a recent interview. “I think having mom-and-pop dealers is really good for business. The thing is, mom-and-pop dealers are going to have to evolve their thinking.”

Sonic Automotive, a publicly traded company with a market capitalization of more than $2 billion, has grown from 96 franchise stores in 2015 to 134 as of the end of last year. It has also gone through a massive expansion of its EchoPark and Sonic Powersports used car stores. The company’s revenues jumped by 58% during that period to $15.2 billion last year.

Others, like Lithia Motors, have been more aggressive in growth. The Medford, Oregon-based company beat out long-standing dealer group AutoNation to become the top new vehicle franchise dealer in the U.S. in 2022.

Lithia, which has a market capitalization of $6.3 billion, has executed an aggressive growth plan, from $8.7 billion in revenue in 2016 to $37.6 billion last year. The company nearly tripled its new and used stores from 154 locations to 455 during that time frame.

John Murphy, a longtime auto analyst and managing director of strategic consulting at buy-and-sell advisory firm Haig Partners, said he believes dealerships remain a highly lucrative market for investors, although things have stabilized somewhat after companies saw inflated profits during the Covid pandemic.

“Structurally, there is some real upside potential, and there is an increasing level of interest by existing capital in the dealer community as well as now from outside players, private equity family offices, and other pools of capital on this limited number of dealers and limited number of dealers,” he said. “The earnings upside is increasing and there is increasing interest or demand on the buy side of the equation.”

All of this combines to make many mom-and-pop agents ripe for acquisition or expansion.

“There are many factors that make competing for a small dealership more difficult,” said Talon Fee, a managing director at Dave Cantin Group who led the sale of Sylvester Chevrolet to Matthews Auto Group. “This doesn’t mean small business agents can’t continue to exist, thrive and survive, but they need a plan.”

Fee and others said the main reasons owners sell are a lack of succession planning, a growing competitive and changing industry, and a lack of commitment to reinvesting in the business.

“There’s a lot of outside capital that’s figured out how to come in, given the fact that you have to be an operator to get manufacturer approval,” said Gordon, of Dave Cantin Group.

But the industry is changing in other ways, such as new automakers Tesla, Rivian and clear Try to bypass the franchised dealer model and sell vehicles directly to consumers.

Such companies have consistently fought state laws to allow such sales, with Rivian recently winning a battle with auto dealers in Washington state by threatening to take its case to voters through a ballot measure to allow direct sales.

It adds to an evolving U.S. auto retail landscape that owners like Sylvester and his wife, who also worked at the dealership, haven’t had to deal with in the past. It’s also something Sylvester and many other small stores won’t have to compete with once their business is sold.

“I’ve had a great life, don’t get me wrong,” said Sylvester, who plans to spend his retirement tending to a 92-acre farm in Pennsylvania. “But, good things come to an end.” “We made a good living. You know, we helped the community.”