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

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

“As a family, we decided this might be the time,” said Sylvester, who at 67 has been contemplating retirement. “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 didn’t feel they were in a position to continue running the business amid the rapidly changing automotive retail landscape in the U.S. The industry is facing a tumultuous adoption of all-electric vehicles, technological shifts such as artificial intelligence, and growing demands from automakers.

Sales of dealerships such as Sylvester Chevrolet are occurring across the country at a rapid pace as the business of selling cars, once considered the purview of mom-and-pop shops, has evolved into a lucrative trillion-dollar industry rife with consolidation that has drawn more notice from Wall Street and investors in recent years.

While the National Automobile Dealers Association, or NADA, reports that the vast majority of its U.S. franchised dealers are small business owners such as Sylvester who have fewer than six stores, the top retailers in the country have significantly grown.

The top 150 dealers sold 27% of all retail and fleet new vehicles in 2025, up from 24.3% in 2021 and 21.2% in 2015, according to Automotive News’ annual ranking of top automotive retailers. They also owned roughly a quarter of dealerships last year, up from less than 20% a decade ago, according to the trade publication.

Meanwhile, top publicly traded dealers such as Lithia Motors and AutoNation have ballooned to market caps of more than $6 billion each. Even online used-car retailer Carvana — and its $74 billion market cap, which surpasses the value of most car companies it sells vehicles from — has quietly started purchasing new vehicle franchises without disclosing its future plans.

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

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

“It’s clear that it’s a consolidating industry, and it’s an industry that is going to continue to consolidate,” Gordon said. But, he added, that is happening at every level, especially the expansion of mom-and-pop shops to larger players.

Dave Cantin Group — the advisor for Matthews Auto Group, the dealer group that acquired Sylvester Chevrolet — conducts dozens of such deals a year and said it expects the pace of consolidation and mergers and acquisitions to continue to increase this year.

Matthews Auto Group is one of many regional dealership companies that has decided to expand. The family-owned company started in Vestal — in central New York, south of Syracuse — in 1973 with a single Chrysler-Plymouth store that has grown into a roughly $800 million business with 18 locations and 800 employees.

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

“I think that’s certainly a competitive advantage. I think staying still is probably not the best play. You’re seeing continued scale,” Matthews said. “The trend is you’re just going to continue to see consolidation to allow you to stay competitive.”

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

“There’s a lot of things that, because of our scale, we see we can 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 let everyone work going forward.”

“I think there’s endless upside. The opportunity for growth in our company is just endless,” Sonic Automotive President Jeff Dyke told CNBC during a recent interview. “I think having mom-and-pop dealers is really good for the business. The thing is, the mom-and-pop dealer is going to have to advance their thinking.”

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

Others, such as Lithia Motors, have been even more aggressive in growth. The Medford, Oregon-based company surpassed longstanding dealership group AutoNation to become the top U.S. new vehicle franchised dealer in 2022.

Lithia, with a $6.3 billion market cap, has executed an audacious growth plan, 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 time frame.

John Murphy, a longtime automotive analyst who is a managing director of strategic advisory at buy-sell advisory firm Haig Partners, said he believes that dealerships remain an extremely lucrative market for investors, despite things settling down somewhat after companies saw inflated profits during the Covid pandemic.

“Structurally, there’s some real potential upside, and there is an increasing level of attention by existing capital in the dealership community as it stands right now from outside players, private equity family offices, other pools of capital on this limited number of dealers and finite number of dealers,” he said. “The earnings upside is increasing and there’s increasing attention, or demand, on the buy side of the equation.”

But the industry is changing in other ways, as new automakers such as Tesla, Rivian and Lucid try to bypass the franchised dealer model and sell vehicles directly to consumers.

Such companies have continuously fought state laws to allow such sales, with Rivian recently winning a battle with car dealers in Washington state by threatening to take its case to voters with a ballot measure to permit direct sales.

It adds to the evolving U.S. automotive retail landscape that owners such as Sylvester and his wife, who also worked at the dealership, haven’t had to deal with in the past. It’s also something Sylvester and many other smaller mom-and-pop stores won’t have to compete with once they sell their businesses.

“I lived a great life, don’t get me wrong. But, hey, good things come to an end,” said Sylvester, who plans to spend retirement caring for a 92-acre farm in Pennsylvania. “We made a good living. You know, we helped the community out.”