Local car dealerships growing, dying amid rise of mega auto retailers
Derek Sylvester with his family members, staff and Molly, the mascot featured in the dealership’s logo.
Courtesy of Sylvester Chevrolet
Derek Sylvester’s father started the family’s original Chevrolet dealership with his bare hands in 1972 on Main Street in rural Peckville, Pennsylvania.
Since then, the store and the family have been pillars of the village outside Scranton. Until late last month, when Sylvester and his family signed a deal to sell Sylvester Chevrolet to a New York-based dealer group.
“As a family, we decided this was the right time,” said Sylvester, who is considering retiring at the age of 67. “Unless you’re a larger store, a much larger store, it’s a little bit harder to make money. … It’s just scale.”
Many of Sylvester’s family members plan to continue working at the dealership, but he said they don’t feel they are in a position to continue running the business in the rapidly changing automotive retail environment in the United States. The industry is facing turbulent adoption of all-electric vehicles, technological changes such as artificial intelligence, and increasing demands from automakers.
Sales at dealerships like Sylvester Chevrolet are occurring at a rapid pace across the country as the business of selling cars, once considered the preserve of mom-and-pop shops, has morphed into a lucrative trillion-dollar industry riddled with consolidations that has attracted increased attention from Wall Street and investors in recent years.
National Automobile Dealers Association, or NADA, reports that the vast majority 90 percent of franchisees in the U.S. are small business owners like Sylvester, with fewer than six stores; The largest retailers in the country have grown significantly.
The top 150 dealers sold 27% of all retail and fleet new vehicles in 2025; this rate was 24.3% in 2021 and 21.2% in 2015. Automotive News’ annual rankings from leading automotive retailers. Additionally, the franchise rate, which was less than 20% a decade ago, reached roughly a quarter last year, according to the trade publication.
Meanwhile, the largest publicly traded dealers Lithia Motors And Auto Nation Each reached a market capitalization of over $6 billion. Even online used car retailers to the caravan — and a market cap of $74 billion that exceeds that of most auto companies to which it sells vehicles — has quietly begun acquiring new vehicle franchises without disclosing future plans.
“There’s a lot of money wanting to come into the industry,” Brian Gordon, president of dealer advisor and broker Dave Cantin Group, told CNBC. “And the industry in general is kind of aligned on how to value these things, which creates a good climate. [mergers and acquisitions]”
Industry consolidation
Multibillion-dollar dealerships are on the rise amid decades of consolidation that has led to a grow-or-die mentality among many U.S. auto retailers.
NADA, a trade association representing franchise dealers, reports that the average franchisee owns two to three stores, but the biggest growth area over the past decade has been midsize franchises with six to 25 stores.
NADA reports Of its approximately 17,000 dealers, 90.5% have one to five stores, down from 94.4% in 2016. Meanwhile, 0.2% of dealers had 50 or more stores, up from 0.1% in the same period.
“It is clear that this is an industry that is consolidating, and it is an industry that will continue to consolidate,” Gordon said. But he added that this was happening at all levels, particularly as mom-and-pop stores were expanded to include larger players.
Dave Cantin Group — consultant Matthews Auto GroupThe dealer group that bought Sylvester Chevrolet completes dozens of such deals a year and said it expects the pace of consolidation, mergers and acquisitions to continue increasing this year.
Matthews Auto Group is one of many regional dealerships that have decided to expand. The family-owned business began in 1973 with a single Chrysler-Plymouth store in Vestal, south of Syracuse in central New York, and has grown into a nearly $800 million business with 18 locations and 800 employees.
Rob Matthews, second-generation owner and CEO of Matthews Auto Group, said the company remains committed to growth and aims to become more profitable and better compete in existing New York and Pennsylvania markets.
Matthews Auto Group CFO John Totolis (from left), Dave Cantin Group general manager Talon Fee, Sylvester Chevrolet President Derek Sylvester, partner Sylvester Chevrolet Neil Sylvester, Matthews Auto Group CEO Rob Matthews and Matthews Auto Group President Mark Gaeta outside Sylvester Chevrolet in Peckville, Pennsylvania
courtesy image
“I definitely think it’s a competitive advantage. I think standing still is probably not the best play. You’re seeing a scale going on,” Matthews said. “The trend is that you will continue to see consolidation to ensure you remain competitive.”
This is also why Sylvester said he wanted to sell his business, with the stipulation that he keep the store’s dozens of employees; This is part of Matthews’ strategy when buying a store.
“There’s a lot of things we can really unlock with a store like that because of our scale,” Matthews said. “Honestly, I think it’s exciting in terms of giving them more tools and allowing everyone to work forward.”
Growth of mega dealers
Wall Street has realized how lucrative and protected franchise dealerships are in the U.S. The franchise system, which exists to sell new vehicles to consumers rather than having automakers sell their vehicles themselves, is unique and tightly regulated.
“I think there’s endless upside. The opportunity for growth in our company is endless.” Sonic Automotive Chairman Jeff Dyke told CNBC during a recent interview. “I think having mom-and-pop sellers is really good for business. The problem is, mom-and-pop sellers are going to have to step up their thinking.”
Sonic Automotive, a publicly traded company with a market capitalization of over $2 billion, grew from 96 franchised dealership stores in 2015 to 134 by the end of last year. There has also been a major expansion of EchoPark used car stores and Sonic Powersports. The company’s revenue during this period increased by 58% last year to $15.2 billion.
Dealership stocks
Others, such as Lithia Motors, have been even more aggressive in expanding. The Medford, Oregon-based company surpassed long-standing dealership group AutoNation to become the top new vehicle franchise dealer in the United States in 2022.
With a market capitalization of $6.3 billion, Lithia has implemented an audacious growth plan, rising from $8.7 billion in revenue in 2016 to $37.6 billion last year. The company nearly tripled its number of new and used stores during this time, from 154 locations to 455 stores.
John Murphy, a long-time automotive analyst and managing director of strategic advisory at trading advisory firm Haig Partners, said he believes dealerships remain a highly lucrative market for investors, although things have calmed down somewhat after companies saw high profits during the Covid pandemic.
“Structurally, there’s some real potential upside and an increasing level of interest right now from outside players, private equity family offices and other capital pools from existing capital in the franchise community to these limited number of dealers and limited number of dealers,” he said. “Earnings growth is increasing and there is increased interest or demand on the buying side of the equation.”
Mothers and fathers stayed
All of this comes together to make many mom-and-pop franchises ripe for acquisition or expansion.
“There are a lot of factors that make competition more difficult for a small mom-and-pop dealership,” said Talon Fee, general manager of Dave Cantin Group, which spearheaded the sale of Sylvester Chevrolet to Matthews Auto Group. “That doesn’t mean small mom-and-pop franchises can’t survive, grow and survive, but they need to have a plan.”
Fee and others said the primary reasons owners sell are a lack of succession planning, a growing competitive and changing industry, and a lack of commitment to reinvesting in businesses.
“There’s a lot of outside capital figuring out how to get in, given the fact that you have to be an operator to get approved by a manufacturer,” said Dave Cantin Group’s Gordon.
But like new automakers, the industry is changing in other ways, too. Tesla’s, rivya And Lucid Try to bypass the franchise dealer model and sell vehicles directly to consumers.
Such companies are constantly fighting state laws to allow such sales; Rivian recently won its battle with car dealers in Washington state by threatening to take its case to voters with a ballot measure that would allow direct sales.
This adds to the U.S.’s thriving automotive retail environment, which owners like Sylvester and his wife, who also work at the dealership, have not had to deal with in the past. This is also something Sylvester and many other small mom-and-pop stores won’t have to compete with after selling their businesses.
“I’ve had a great life, don’t get me wrong. But, hey, good things come to an end,” said Sylvester, who plans to spend his retirement tending a 92-acre farm in Pennsylvania. “We made a good living. You know, we helped the community.”
