Local car dealerships grow, die amid rise of auto mega-retailers

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

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

“As a family, we decided maybe it was time,” said Sylvester, who at 67 is considering retirement. “Unless you’re a bigger, much bigger store, it’s a little harder to make money…It’s just a matter of scale.”

Many of Sylvester’s family members plan to continue working at the dealership, but he said they don’t feel able to continue running the business in a rapidly changing U.S. auto retail landscape. The industry faces tumultuous adoption of fully electric vehicles, technological changes such as artificial intelligence and growing demands from automakers.

Sales at dealerships such as Sylvester Chevrolet are occurring at a rapid pace across the country, as car sales, once considered the province of mom-and-pop stores, have become a lucrative, multibillion-dollar industry rife with consolidation 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 franchise dealerships in the United States are small business owners like Sylvester who have fewer than six stores, the number of major retailers nationwide has 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’ annual ranking of top auto retailers. They also held about a quarter of the concessions last year, compared to less than 20% a decade ago, according to the trade publication.

Meanwhile, major publicly listed dealers such as Lithia engines And AutoNation have exploded to reach market capitalizations of more than $6 billion each. Even online used car retailers Carvana — and its $74 billion market capitalization, which exceeds the value of most of the automakers it sells vehicles to — has quietly begun buying new vehicle franchises without disclosing its future plans.

“There’s a lot of money that wants to come into the industry,” Brian Gordon, president of broker-advisor and broker Dave Cantin Group, told CNBC. “And, in general, the industry is sort of aligned on how to value these things. It creates a good climate for [mergers and acquisitions]”.

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

NADA, a trade association representing franchised dealerships, reports that the average dealership owner owns between two and three stores, but the biggest growth area over the past decade has been mid-sized dealerships that own between six and 25 stores.

NADA says 90.5% of its nearly 17,000 dealers own between one and five stores, up from 94.4% in 2016. Meanwhile, 0.2% of dealers own 50 or more stores, up from 0.1% during that period.

“It’s clear that this is an industry that’s consolidating, and it’s an industry that’s going to continue to consolidate,” Gordon said. But, he added, it’s happening across the board, particularly in the expansion of mom-and-pop stores into larger players.

Dave Cantin Group — the advisor to Matthews Auto Group, the dealership group that acquired Sylvester Chevrolet — conducts dozens of such deals each year and said he expects the pace of consolidations and mergers and acquisitions to continue to accelerate this year.

Matthews Auto Group is one of several regional dealership companies that have decided to expand. The family business began in Vestal – in central New York, south of Syracuse – in 1973 with a single Chrysler-Plymouth store that grew into an approximately $800 million company with 18 locations and 800 employees.

Rob Matthews, second-generation owner and CEO of Matthews Auto Group, said the company’s growth decision is ongoing and it aims to be more profitable and competitive in its current markets of New York and Pennsylvania.

“I think it’s definitely a competitive advantage. I think standing still is probably not the best play. You see a continuous ladder,” Matthews said. “The trend is toward continued consolidation to allow you to remain competitive.”

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

“There are a lot of things that, because of our size, allow us to really unlock a store like his,” 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 in the future.”

Wall Street has noticed how lucrative and protected franchise dealerships are in the United States. The franchise dealership system, which exists to sell new vehicles to consumers rather than automakers selling their vehicles themselves, is unique and heavily regulated.

“I think there are endless benefits. The growth opportunities for our business are simply endless,” Sonic Automobile President Jeff Dyke told CNBC in a recent interview. “I think having family dealers is really good for the business. The fact is that family dealers are going to have to step up their thinking.”

Sonic Automotive, a publicly traded company with a market capitalization of more than $2 billion, grew from 96 franchised stores in 2015 to 134 at the end of last year. It has also seen a massive expansion of its EchoPark and Sonic Powersports used vehicle stores. The company’s revenue during that period jumped 58% to $15.2 billion last year.

Others, like Lithia Motors, have grown even more aggressively. The Medford, Oregon-based company has overtaken longtime dealership group AutoNation to become the top franchised new vehicle dealership in the United States in 2022.

Lithia, with a market cap of $6.3 billion, executed an aggressive growth plan, growing 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 stores during that period.

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

“Structurally, there is real upside potential, and the existing capital in the dealer community, as it stands now, is bringing increasing attention from outside players, private equity family offices, other capital pools to this limited number of dealers and this finite number of dealers,” he said. “The upside potential for earnings is increasing and there is increasing attention or demand on the buy side of the equation.”

All of this combines to make many family-owned dealerships ripe for acquisition or expansion.

“There are so many factors that make it more difficult for a small, family-owned dealership to compete,” said Talon Fee, general manager of the Dave Cantin Group who led the sale of Sylvester Chevrolet to Matthews Auto Group. “That’s not to say that small mom-and-pop dealerships can’t continue to exist and thrive and survive, but they need to have a plan.”

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

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

But the industry is changing in other ways, as new automakers such as Tesla, Rivien And Lucid try to bypass the franchise dealership model and sell vehicles directly to consumers.

These companies have continued to fight state laws allowing such sales, with Rivian recently winning a battle against Washington state auto dealers by threatening to take its case to voters with a ballot measure allowing direct sales.

This adds to the changing landscape of auto retail in the United States, which owners such as Sylvester and his wife, who also worked at the dealership, had not had to deal with in the past. It’s also something that Sylvester and many other small mom-and-pop stores won’t have to compete with once they sell their business.

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