Subscriber Benefit
As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowMergers and acquisitions have been strong among Indiana auto dealerships for the past few years, but dealmakers’ predictions are mixed for 2025.
The big question looming this year is whether President Donald Trump’s new economic policies—such as his emphasis on tariffs and his revoking of Biden-era electric vehicle incentives–will impact auto sales in general and dealership mergers in particular.
Jason Lueking, an attorney in Stoll Keenon Ogden’s Indianapolis office, said some of the M&A deals he’s seen in recent years came together in part because owners didn’t want to have to deal with charging-station construction costs associated with handling electric vehicles and were looking for buyers.
The pressure on that front may be off now that the Trump administration has de-emphasized electric vehicles. But there’s no doubt that consolidation has been the trend among auto dealers over the past decade, especially for family-owned dealerships that the next generation had no interest in running.
Bank of America reported that nationally, the top 10 dealership groups now own 9.3% of the roughly 17,000 dealerships in the U.S., an all-time high, according to Automotive News’ 2024 research.
Ron Smith, an attorney with Stoll Keenon Ogden and chair of the firm’s Auto Dealer Services practice, said another reason for consolidation has been the rising compliance costs each dealership faces to keep up with federal rule changes.
Out-of-state buyers
In terms of M&A activity in the Indiana auto market, attorneys representing auto dealerships see a mix of out-of-state companies looking to expand and Indiana-based dealerships open to opportunities for growth.
“There’s been quite a bit of activity in Indiana. To some extent, I don’t look for that to subside,” said Smith, who has represented dealers for 56 years and also serves as lead outside counsel for the Automobile Dealers Association of Indiana.
Smith said singled out The Ed Napleton Automotive Group and Asbury Automotive Group as examples of two major national companies that have moved into Indiana in the last decade with acquisitions of local dealerships.
The Ed Napleton Automotive Group, based in the Chicago suburb of Oakbrook Terrace, Illinois, acquired Butler’s Hyundai, Fiat, Maserati and Alfa Romeo dealerships in Indianapolis, along with its Kia dealerships in Fishers and Carmel, in 2017.
Asbury entered the Indianapolis-area market in January 2017 with the $80 million purchase of Hare Chevrolet in Noblesville. Its other Indiana acquisitions have included Butler Toyota, Bill Estes Auto Group and Terry Lee Honda of Avon.
Smith said a lot of growth and deals are fostered by a dealer’s need to reach a “critical mass” on their sales and wanting an economy of scale for their businesses.
Post-pandemic peak?
Geoffrey Grodner, an attorney with Mallor Grodner Plummer, represents new and used automobile dealers in Indiana, Ohio, Illinois, Michigan, Kentucky, and Florida.
He said M&A activity has been steady in Indiana, with a peak in deal activity taking place in 2022 and 2023, just after the pandemic.
Auto dealership mergers are still in the works, but the rise in interest rates and projections of dwindling car sales due to consumers being unable to take on additional debt has somewhat diminished the number of deals in the last year or so, Grodner said.
He said there have been some regional auto groups that have acquired dealerships in Northwest Indiana in recent years, in addition to activity in Central Indiana, Southern Indiana and Evansville.
In October, for instance, Evansville-based Romain Automotive Group in October announced its acquisition of Champion Chevrolet in Avon, marking the company’s first foray into the Indianapolis market.
Auto dealerships face a lot of imposing costs, Grodner said, whether from federal regulations or manufacturer-required new facility requirements.
To build a new auto dealership, even a small one, can cost at least $2 million. Grodner said that dollar amount can rise to anywhere from $10 to $30 million in the Indianapolis metropolitan area, depending on the size of the dealership.
The attorney said he has a client building a dealership in a smaller Indiana city that will probably cost $3 million, when factoring in costs including the land purchase, building, equipment, furnishings and manufacturer standards,
“Building a new dealership has always been expensive,” Grodner said.
What will 2025 look like?
While the overall M&A market is generally expected to gain strength in 2025, some dealmakers are taking a wait-and-see attitude when it comes to auto dealerships.
National law firm Dykema released its 20th Annual M&A Outlook Survey in October, surveying more than 200 senior executives and dealmaking advisors across many sectors about the overall 2025 market.
According to the firm, 70% of respondents expected a stronger U.S. merger and acquisition landscape in the next 12 months, driven by improved financial markets, the availability of capital and a stabilizing economy.
But there are many other factors that could affect auto dealerships and the auto industry in general.
Tariffs on Mexico and Canada could increase the cost of auto parts and vehicles. Tax cuts could increase the amount of disposable income to make new car purchases. Trump’s business-friendly policies could boost the economy. His shift away from electric vehicles could disrupt the manufacturing industry’s shift toward green vehicles.
Lueking of Stoll Keenon Ogden said it’s difficult to imagine that the shift toward electric vehicles can be totally deterred. He’s expecting M&A activity among dealerships to remain as steady as it was in 2024 but acknowledges that some unresolved factors could ultimately influence the outcome.
Grodner said that while the auto dealership M&A market has been very active in the last three or four years he expects it to cool somewhat, based on what he’s been reading in business journals.
Marty Murphy, executive vice president of the Automobile Dealers Association of Indiana, said it’s hard for him to predict what may happen in the year ahead. He said that, due to non-disclosure agreements between buyers and sellers, he often doesn’t know about impending deals until they’re almost completed.
But he said he’s seen more companies wanting to come into Indiana and buy multiple dealerships. And established Indiana dealers are also looking for opportunities, he added.
“There are plenty of dealers looking for a deal in Indiana,” Murphy said.
Please enable JavaScript to view this content.