Derek Sylvester with members of his household, workforce and mascot Molly, who was featured on the dealership’s emblem.
Courtesy Sylvester Chevrolet
Derek Sylvester’s father constructed the household’s authentic Chevrolet dealership together with his naked palms on Most important Road in rural Peckville, Pennsylvania, in 1972.
The shop and household have been a pillar of the village, outdoors Scranton, ever since. That was till late final month, when Sylvester and his household closed a deal to promote Sylvester Chevrolet to a New York-based supplier group.
“As a household, we determined this is likely to be the time,” mentioned Sylvester, who at 67 has been considering retirement. “Until you are a bigger retailer, a a lot bigger retailer, it is a little bit bit more durable to earn a living. … It is simply scale.”
A lot of Sylvester’s members of the family plan to proceed working on the dealership, however he mentioned they did not really feel they have been ready to proceed working the enterprise amid the quickly altering automotive retail panorama within the U.S. The trade is dealing with a tumultuous adoption of all-electric automobiles, technological shifts reminiscent of synthetic intelligence, and rising calls for from automakers.
Gross sales of dealerships reminiscent of Sylvester Chevrolet are occurring throughout the nation at a speedy tempo because the enterprise of promoting vehicles, as soon as thought of the purview of mom-and-pop outlets, has developed right into a profitable trillion-dollar trade rife with consolidation that has drawn extra discover from Wall Road and buyers lately.
Whereas the Nationwide Vehicle Sellers Affiliation, or NADA, stories that the overwhelming majority of its U.S. franchised sellers are small enterprise house owners reminiscent of Sylvester who’ve fewer than six shops, the highest retailers within the nation have considerably grown.
The highest 150 sellers bought 27% of all retail and fleet new automobiles in 2025, up from 24.3% in 2021 and 21.2% in 2015, in keeping with Automotive Information’ annual rating of high automotive retailers. Additionally they owned roughly 1 / 4 of dealerships final 12 months, up from lower than 20% a decade in the past, in keeping with the commerce publication.
In the meantime, high publicly traded sellers reminiscent of Lithia Motors and AutoNation have ballooned to market caps of greater than $6 billion every. Even on-line used-car retailer Carvana — and its $74 billion market cap, which surpasses the worth of most automotive firms it sells automobiles from — has quietly began buying new car franchises with out disclosing its future plans.
“There’s some huge cash that wishes to come back to the trade,” Brian Gordon, president of supplier advisor and dealer Dave Cantin Group, advised CNBC. “And, typically, the trade is form of aligned on methods to worth this stuff. That makes for a great local weather for [mergers and acquisitions].”
Trade consolidation
Multibillion-dollar dealerships have been on the rise amid a decadeslong consolidation that has led to a grow-or-die mentality for a lot of U.S. automotive retailers.
NADA, a commerce affiliation representing franchised sellers, stories the common dealership proprietor has between two and three shops, however the largest progress space over the previous decade has been in medium-sized dealerships that personal between six and 25 shops.
NADA stories 90.5% of its practically 17,000 sellers personal between one and 5 shops, down from 94.4% in 2016. In the meantime, 0.2% of sellers personal 50 shops or extra, up from 0.1% throughout that timeframe.
“It is clear that it is a consolidating trade, and it is an trade that’s going to proceed to consolidate,” Gordon mentioned. However, he added, that’s taking place at each stage, particularly the enlargement of mom-and-pop outlets to bigger gamers.
Dave Cantin Group — the advisor for Matthews Auto Group, the supplier group that acquired Sylvester Chevrolet — conducts dozens of such offers a 12 months and mentioned it expects the tempo of consolidation and mergers and acquisitions to proceed to extend this 12 months.
Matthews Auto Group is one in all many regional dealership firms that has determined to develop. The family-owned firm began in Vestal — in central New York, south of Syracuse — in 1973 with a single Chrysler-Plymouth retailer that has grown right into a roughly $800 million enterprise with 18 areas and 800 staff.
Rob Matthews, a second-generation proprietor and CEO of Matthews Auto Group, mentioned the corporate’s resolution to develop is ongoing and that it goals to be extra worthwhile and higher compete in its present markets of New York and Pennsylvania.
Matthews Auto Group CFO John Totolis (from left to proper), Dave Cantin Group managing director Talon Charge, Sylvester Chevrolet President Derek Sylvester, accomplice Sylvester Chevrolet Neil Sylvester, Matthews Auto Group CEO Rob Matthews and Matthews Auto Group President Mark Gaeta outdoors Sylvester Chevrolet in Peckville, Pennsylvania
Courtesy picture
“I believe that is actually a aggressive benefit. I believe staying nonetheless might be not the very best play. You are seeing continued scale,” Matthews mentioned. “The pattern is you are simply going to proceed to see consolidation to can help you keep aggressive.”
That is additionally why Sylvester mentioned he wished to promote his enterprise, with stipulations about retaining the shop’s dozens of staff — one thing that is a part of Matthews’ technique when buying a retailer.
“There’s lots of issues that, due to our scale, we see we are able to actually unlock a retailer like his,” Matthews mentioned. “I believe, truthfully, it is thrilling within the sense that we’re simply seeking to give them extra instruments and hopefully let everybody work going ahead.”
Progress of mega-dealers
Wall Road has taken discover of how profitable and guarded franchised dealerships are within the U.S. The franchised supplier system, which exists to promote new automobiles to customers slightly than automakers promoting their automobiles themselves, is exclusive and closely regulated.
“I believe there’s infinite upside. The chance for progress in our firm is simply infinite,” Sonic Automotive President Jeff Dyke advised CNBC throughout a latest interview. “I believe having mom-and-pop sellers is admittedly good for the enterprise. The factor is, the mom-and-pop supplier goes to need to advance their considering.”
Sonic Automotive, a publicly traded firm with a market cap of greater than $2 billion, has grown from 96 franchised dealership shops in 2015 to 134 to finish final 12 months. It is also gone via an enormous enlargement of its EchoPark used car shops and Sonic Powersports. The corporate’s income throughout that point jumped 58% to $15.2 billion final 12 months.
Dealership shares
Others, reminiscent of Lithia Motors, have been much more aggressive in progress. The Medford, Oregon-based firm surpassed longstanding dealership group AutoNation to turn out to be the highest U.S. new car franchised supplier in 2022.
Lithia, with a $6.3 billion market cap, has executed an audacious progress plan, from $8.7 billion in income in 2016 to $37.6 billion final 12 months. The corporate practically tripled its new and used shops from 154 areas to 455 shops throughout that timeframe.
John Murphy, a longtime automotive analyst who’s a managing director of strategic advisory at buy-sell advisory agency Haig Companions, mentioned he believes that dealerships stay an especially profitable marketplace for buyers, regardless of issues settling down considerably after firms noticed inflated income throughout the Covid pandemic.
“Structurally, there’s some actual potential upside, and there may be an growing stage of consideration by current capital within the dealership group because it stands proper now from outdoors gamers, personal fairness household workplaces, different swimming pools of capital on this restricted variety of sellers and finite variety of sellers,” he mentioned. “The earnings upside is growing and there is growing consideration, or demand, on the purchase aspect of the equation.”
Mother-and-pops stay
All of that mixes to make many mom-and-pop dealerships ripe for acquisition or enlargement.
“There’s simply so many components that make competitors for a small mom-and-pop dealership harder,” mentioned Talon Charge, a managing director at Dave Cantin Group who led the sale of Sylvester Chevrolet to Matthews Auto Group. “It is to not say that small mom-and-pop dealerships cannot live on and thrive and survive, however they do must have a plan.”
Charge and others mentioned the highest causes for house owners to promote are a scarcity of succession planning, a rising aggressive and altering trade, and a scarcity of dedication to reinvest within the companies.
“There’s lots of outdoors capital that is discovered methods to are available in, given the truth that you must be an operator with the intention to get accepted by a producer,” mentioned Gordon, of Dave Cantin Group.
However the trade is altering in different methods, as new automakers reminiscent of Tesla, Rivian and Lucid attempt to bypass the franchised supplier mannequin and promote automobiles on to customers.
Such firms have repeatedly fought state legal guidelines to permit such gross sales, with Rivian lately successful a battle with automotive sellers in Washington state by threatening to take its case to voters with a poll measure to allow direct gross sales.
It provides to the evolving U.S. automotive retail panorama that house owners reminiscent of Sylvester and his spouse, who additionally labored on the dealership, have not needed to take care of up to now. It is also one thing Sylvester and plenty of different smaller mom-and-pop shops will not need to compete with as soon as they promote their companies.
“I lived a fantastic life, do not get me fallacious. However, hey, good issues come to an finish,” mentioned Sylvester, who plans to spend retirement caring for a 92-acre farm in Pennsylvania. “We made a great residing. You recognize, we helped the group out.”