The 2026 Kerrigan OEM Survey found that 45% of manufacturer executives now expect fewer dealers in their networks within five years, up 12 percentage points in a single year. What that consolidation signal means for European dealer groups, and what determines which rooftops end up in the network of 2031.
Kerrigan Advisors published its fourth annual OEM Survey on July 13. Roughly 150 US automotive manufacturer executives, surveyed between December 2025 and June 2026, gave their view of what dealer networks will look like five years from now.
The headline number: 45% of them expect their networks to have fewer dealers within five years. Twelve months ago, when Kerrigan ran the same survey, that figure was 33%. A twelve-point jump in a single year on a five-year outlook question is not incremental. That is the manufacturer side of the industry telling franchise dealers, in aggregate, that roughly half of OEMs are actively planning for a smaller point-of-sale network.
The survey is US-focused. The trend is not. European OEMs are running the same playbook under different names: agency-model expansion at Volvo, Mercedes-Benz, Mini and Honda; Chinese entrants launching with lean dealer networks; facility-standard uplifts across German premium brands; multi-brand consolidation among European dealer groups where the large groups keep getting larger and the mid-sized principals keep selling out.
The Erin Kerrigan quote from the survey summary is the most useful line for European dealer group leadership to internalise. “The consolidation signal in this year’s survey is significant: OEMs are planning for a network of fewer, but more profitable, dealers.”
Fewer, larger, and more profitable is the OEM vision. What that means for the dealer group sitting in the middle of it, and what actually determines who is left in the network in 2031, is what the rest of this piece is about.
The consolidation logic is not about cost reduction on the OEM side. Distribution economics for automotive OEMs are already dealer-financed in the traditional franchise model. The OEM captures margin on the sale to the dealer. The dealer carries the inventory, funds the facility, staffs the sales floor. Cutting dealer count does not save the OEM money directly.
The Kerrigan data suggests what the OEMs are actually optimising for is a network they can lift the standards of, brand-align more tightly, and control the customer relationship through more consistently. The same survey found 43% of OEM executives expect their organisation to require a new image facility from dealers within five years. Facility standards are going up. Investment requirements per rooftop are going up. Brand experience consistency is going up. All at the same time as network size is coming down.
This tracks with the broader shift in OEM commercial strategy over the past three years. Vehicle configuration has moved online and pricing transparency has increased across the whole category. The point-of-sale relationship the OEM used to depend on the dealer to own is now something the OEM increasingly builds directly, through app-based experiences, subscription services, and DTC channel investments alongside the traditional dealer network. The dealer is still the closer. The dealer is no longer the only relationship holder.
In that world, the OEM logic runs: fewer dealers, higher facility standards, better-capitalised operators, more consistent brand experience, tighter control of the customer relationship. Erin Kerrigan calls this “fewer, but more profitable” dealers. What that means in practice is that the dealers who remain will each cover more territory, be held to higher performance standards, and face higher facility investment obligations.
The dealer principals who see the shift as an inconvenience are underestimating how permanent it is.
The Kerrigan survey is US. The pattern is European.
Volvo reported a 21% year-on-year lift in UK private car sales in the first half of 2026 through its agency model. The Volvo agency system removes negotiation, sets fixed pricing across the network, and gives the OEM more direct control over the buyer relationship at the point of sale. Volvo is not alone. Mercedes-Benz, Mini and Honda are all operating meaningful agency-model programmes in Europe. Autocar reported in July that after years of high-profile retreats and delays, the brands that stuck with agency selling appear to have found the workable version of the model.
Chinese OEMs entering Europe are launching with lean dealer networks by design. BYD’s European volume grew 124.5% year-on-year in April 2026. The dealer experience Chinese OEMs are launching with reflects what Chinese buyers expected from domestic OEMs over the past five years: app-based booking, digital-first configuration, direct customer relationships, and lean physical touchpoints. When a new market entrant designs the network from scratch in 2026, they do not build a legacy franchise network. They build a lean one.
European facility standards are rising across the premium OEMs. Corporate identity refresh programmes at Audi, BMW, Mercedes-Benz and Porsche have all pushed dealer facility requirements up materially over the past three years. The economics of maintaining a franchise for a specific European premium brand have become meaningfully more capital-intensive.
Multi-brand consolidation among European dealer groups is proceeding at pace. Emil Frey, Pendragon, Inchcape, Vertu and other large multi-brand groups have been steadily acquiring smaller principals for the past five years. The pattern is exactly what the Kerrigan data predicts: fewer, larger, better-capitalised dealer groups holding the remaining points of sale.
The European market is not immune to the consolidation the US OEMs are signalling. If anything, Europe is further into it.
The question that matters for European dealer principals reading the Kerrigan data is what determines whether their specific rooftops end up in the network of the future, or whether their franchise gets consolidated into someone else’s territory.
The answer is not primarily about size. Large groups do get preserved by default when consolidation happens. Small principals with genuinely differentiated per-rooftop economics also survive. The dealers who get cut are typically the ones who are neither large nor differentiated: mid-sized, adequate-performing, in territories the OEM believes can be covered by an adjacent rooftop.
The per-rooftop metric that determines “worth keeping” has four components in most OEM assessments.
First is conversion economics. Two rooftops in the same territory with the same brand deliver very different pipeline conversion rates. The one with 3X the test drive booking rate against the same paid acquisition spend is materially harder to consolidate away. The one that is roughly average is not.
Second is service retention. Dealer groups that lock in service customers lock in lifetime value. Service retention data is visible to the OEM through warranty processing systems and service action reporting. Groups that operate service drives with 24/7 booking, VIN-aware conversations, and proactive recall outreach show up in that data.
Third is brand experience consistency across the dealer’s touchpoints. Facility standards are one part of this. Digital experience quality is the other. The dealer’s website, chat channels, WhatsApp presence, dealer app, and CRM continuity are increasingly part of the brand audit.
Fourth is capital position. The OEM asks whether the dealer principal can fund the next facility refresh, the next digital retail infrastructure investment, and the next EV service capability build-out. Under-capitalised dealer groups struggle to meet rising facility and technology standards, and they are the natural consolidation candidates.
Digital retail infrastructure now sits under all four of these. The dealer group whose digital retail infrastructure runs on a unified conversational layer across voice, chat, WhatsApp and dealer app is materially outperforming peer rooftops on conversion, service retention, brand experience consistency, and marketing efficiency. Onlive’s Automotive AI Agent operates that architecture today across 1,500+ European dealerships in 20+ markets. That performance shows up in the OEM’s network assessment before any consolidation decision gets made.
For dealer principals who read the Kerrigan data and take it seriously, the 12-month planning question is what to do now to be one of the ones left in the network in 2031. Four operational priorities matter more than the others.
First: audit per-rooftop conversion economics. Not the aggregated dealer-group number. The specific per-rooftop rate at which paid acquisition traffic converts to booked test drives and closed sales. Compare it to the peer set. Identify the two or three rooftops that are dragging the group average down and understand why. In many cases the underperforming rooftops share the same architectural gap: single-channel BDC coverage, no WhatsApp presence, weak digital handoff to the sales floor.
Second: invest in digital retail infrastructure that closes those gaps. The gap between top-quartile and median dealer rooftops on conversion is largely explained by digital retail architecture and BDC integration, not by sales floor performance. Fixing that is a technology and operational decision, not a hiring decision.
Third: build the service drive. Service retention is where dealer lifetime value lives. It is also where the OEM sees the strongest signal on which dealers are worth keeping. Service AI, 24/7 booking, VIN-aware conversation history, and multi-channel access to service booking are increasingly the operational baseline. Groups that are behind here have twelve months to catch up.
Fourth: articulate the multi-market brand story. Groups operating across multiple markets and multiple OEM brand networks are more valuable to the OEM if the brand experience is consistent across their entire footprint. That consistency is enforced through shared conversational architecture, shared compliance posture, and shared customer data infrastructure. Groups that run five different vendors across five markets deliver a fragmented brand experience that shows up in the OEM’s network audit.
None of these are twelve-month transformations. They are twelve-month starting points on a three-year investment cycle. The dealer groups that begin now are meaningfully better positioned for the 2028-2029 consolidation cycle than the ones still evaluating.
The interesting operational question is not just who survives the consolidation. It is what happens to the surviving dealers on the other side.
The Kerrigan data suggests they end up with more territory per rooftop, higher facility investment obligations, higher OEM expectations per rooftop, and a franchise that is materially more valuable as a scarce asset.
The territory-per-rooftop effect is significant. If an OEM cuts its network by 15% over five years and total sales are held steady, the remaining dealers each cover roughly 18% more addressable market. That larger territory is worth more per rooftop but requires more logistical capacity to serve: larger service drives, more sales team capacity, more BDC capacity, and more automation to handle the same customer volume without proportional headcount increase.
The facility investment obligation runs in the same direction. Higher standards, larger footprint requirements, deeper digital retail infrastructure requirements. Dealers who cannot fund that investment are the natural consolidation candidates. Dealers who can fund it inherit larger addressable markets.
The franchise-as-scarce-asset effect matters for dealer principals thinking about succession or exit. The Kerrigan data shows 82% of OEM executives expect dealership blue sky values to remain steady or increase in 2026. Fewer dealers, higher expectations, tighter OEM control, and the value of a franchise that survives the consolidation actually goes up. That is not intuitive to most dealer principals. It is what the data shows.
The dealer group that positions itself as a survivor of the consolidation is not just protecting current cash flow. It is compounding equity value against a smaller pool of surviving franchises.
The dealer group that is still in the network in 2031 has already made the decisions that make it worth keeping.
Its per-rooftop conversion economics are materially above the peer average. The paid acquisition spend it runs through Google, Meta and OEM programmes converts at 2X to 3X the median rate for the same brand. That performance is visible to the OEM. The reason the group is worth keeping is data-driven, not narrative-driven.
Its service drive operates 24/7 across every channel the customer uses. Voice AI answers the phone. WhatsApp handles the appointment booking. The dealer app manages the customer relationship. Web chat picks up the buyer moving between channels. VIN-aware conversations reference the customer’s actual service history. Service retention data shows up in the OEM’s dashboard as top-quartile.
Its digital retail infrastructure runs on a unified conversational layer rather than a stack of single-channel point solutions. The buyer who calls the dealership on Tuesday, sends a WhatsApp message on Wednesday, and chats on the website on Thursday is one customer with one shared context across every channel. The OEM’s brand experience audit reads clean.
Its capital position lets it fund the next facility refresh, the next technology investment, the next EV service build-out, and the next multi-channel architecture upgrade without hesitation. The group is not fighting to meet OEM standards. It is setting them.
Its multi-market presence delivers a consistent brand experience across every rooftop. When the OEM’s global brand team looks at how the customer experience runs across the group’s footprint in five markets, they see the same architecture, the same compliance posture, the same service quality.
None of this is unreachable. None of it is easy. All of it is what the Kerrigan data is signalling as the standard for the network of 2031. For dealer principals working out the operational playbook, the Ultimate Guide to AI-Powered Customer Engagement in Automotive covers the multi-channel architecture, the compliance posture, and the implementation framework in detail.
The OEMs are planning for a smaller network. The dealer groups that plan for it too are the ones still in it.