M&A SURGES TO EVEN HIGHER LEVELS We anticipate even more dealer transactions this year than we saw in 2024, one of the top three years from a volume standpoint. The forces driving M&A to new highs in recent years are still in play, bolstered by new geographic trends. • Dealers are sitting on capital amassed through the COVID-19 boom times, and they’re motivated to grow. In this consolidating market, they can see the urgent need to scale for maximum efficiency. • Both international and large domestic institutional investors have renewed their interest in automotive retail. A number of financial investors, including marquee private equity firms and family offices, see opportunities in franchised auto retail and are pursuing dealership investment strategies. • Leadership teams are stronger. After years of struggle to fully staff management positions, most owners finally have capable executive teams to facilitate efficient expansion. • Technology supports the efficient addition of locations. While dealers have traditionally aimed to scale for five to 10 stores in a specific market, technology now enables multi-store efficiency gains beyond a contiguous geographic area. In response to that new capability, we’re seeing a definite trend toward less-localized growth, with dealership expansions finding scale in systems and processes. • Less favored markets are in. California, Minnesota, Illinois and the Northeast are now becoming M&A targets. Reduced dealership values in California make it an enticing market for M&A value investors. Thirty-nine million Californians still need to buy and service vehicles. MARKET CONDITIONS OFFER AN IDEAL WINDOW TO MONETIZE YOUR BUSINESS If you’d rather go than grow, now should provide ample opportunity to make your exit. With M&A activity having accelerated to an even higher level, owners who choose an off-ramp rather than facing the challenges of another business reset will have an opportunity to move on. With growth-minded dealership groups coming off strong-performing years and capital available for promising acquisitions, you couldn’t ask for a better time to explore offloading nonstrategic stores or putting your transition plans into motion. WHAT MAKES A DEALERSHIP ATTRACTIVE FOR ACQUISITION? Stores with specific strengths will command a premium in the rush to snap up solid auto dealerships. Whether they’re private investors, growth-focused auto retailers or other interested parties, buyers are looking for stores with the characteristics that pair maximum potential for continued growth and profitability with the resilience to handle market shifts and downturns. That translates to strong service retention rates following vehicle sales, fully staffed and highly capable management teams, desirable brands and updated facilities that meet manufacturer standards for image and capacity. Businesses that know how to tap the potential of F&I programs to generate profits will have an edge. Dealers who deferred capital investment, or can’t meet these buyer expectations for any reason, will have to sell their stores at a discount. RESET TO MEET TODAY’S MARKET AND CONTINUE BUILDING VALUE The year ahead holds promise for dealers who can adapt, retool and seize opportunities that emerge. Truist’s knowledgeable Dealer Services team is here to help you make the most of what the auto retail market offers. Count on our experience, insight and strategic support to help you every step of the way. To learn more, visit www.truist.com/dealerservices. This document is being furnished to senior management of existing or prospective investment banking clients of Truist Securities Inc. for information purposes only and may not be reproduced or redistributed to any person outside of their company. © 2025 Truist Financial Corporation. Truist and Truist Securities are service marks of Truist Financial Corporation. All rights reserved. Truist Securities is the trade name for the corporate and investment banking services of Truist Financial Corporation and its subsidiaries. Securities and strategic advisory services are provided by Truist Securities Inc., member FINRA and SIPC. | Lending, financial risk management and treasury management and payment services are offered by Truist Bank. | Deposit products are offered by Truist Bank, Member FDIC. 1. Global EV driver survey 2024, Global EV Alliance, December 2024. 2. Consumers Face Challenges as New-Vehicle Inventory Drops 7.4% in April Amid Tariff Uncertainty, Cox Automotive, May 15, 2025. We anticipate even more dealer transactions this year than we saw in 2024, one of the top three years from a volume standpoint. 15 Arkansas Auto Dealer
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