Toyota is the brand most trusted by dealers, and Ford and Nissan the least trusted

Dissatisfied with Ford’s electric vehicle strategy, dealers expect a decline in the value of the automaker’s dealerships, while they have optimistic expectations for showrooms that sell Toyota and Lexus vehicles.

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US auto dealers have high hopes for the auto industry in 2024, according to new research from Kerrigan Advisors. Of the 650 merchants surveyed anonymously, 52% expected their business valuations to remain high over the next 12 months. The strong performance and the expectation that the good times will continue means traders are looking to invest in their business.

“Positive sentiment is leading nearly half of dealers to look for acquisitions and expansion, which is certainly an endorsement for the future of the industry,” said Erin Kerrigan, founder and managing director of Kerrigan Advisors. “Dealerships remain one of the most profitable investments private dealers can make with an average return on equity of 33% in 2023.”

Car brand dealers expecting to make the most profit are Kia, Hyundai, Lexus, Toyota and Porsche, according to the Kerrigan report. In fact, 44% of dealers expect Kia dealer ratings to rise, which is double the industry average.

Read: Americans love full-size SUVs and the pandemic has helped boost sales

However, Kia and Hyundai were not among the brands that dealers trusted the most. That honor goes to Toyota and Lexus. When surveyed, 72 percent of dealers expressed a high level of confidence in the Japanese automaker, which is three times higher than the industry average.

Much of this disparity is due to different brands’ approaches to electricity, Kerrigan argues. Dealers are still dissatisfied with automakers’ electric vehicle strategies, especially as vehicles begin to last longer, making Toyota’s slow and steady approach attractive to them.

This discontent is reflected in the list of brands that merchants trust the least. Topping the charts are Ford and Lincoln, also the two brands whose ratings were less than expected to rise. This may explain why the automaker is reconsidering its electric vehicle plans.

Most and least trusted brands according to merchants

Ford told Auto News that its dealers are “important strategic partners and we are always listening and making adjustments.” Working with our dealers, we have recently made meaningful changes to address dealer feedback and improve franchise value.

Electricity was not the only reason why merchants did not trust brands. Stellantis Chrysler-Jeep-Dodge-Ram (CDJR) dealers were among the franchise dealers expected to lose value in the next 12 months. This is a result of high inventory levels and a lack of stimulus spending.

However, the majority of traders remain optimistic about the wider auto industry next year, with 62 percent believing their profits and valuations will remain as high as they are now, or close to them. Kerrigan describes this as a strong endorsement for the future of the auto industry.