Is now a good time to buy or sell an automotive business?

The automotive sector continues to evolve at pace. From electrification and digitalisation to changing consumer buying habits, businesses across the automotive retail and aftermarket landscape are operating in a market undergoing significant transformation.

Against this backdrop, we are often asked, ‘is now a good time to buy or sell an automotive business?’

While there is no universal answer, the current market presents opportunities for both buyers and sellers who understand where value is being created and what investors are looking for.

Business growth and acquisition opportunities in the automotive sector

The UK online automotive retail and automotive goods market is worth approximately £2.9 billion and is forecast to grow steadily over the coming years, reaching around £3.3 billion by 2031/32.

Growth is being driven by several factors including continued adoption of electric vehicles (EVs), increasing use of the online marketplace, and rising demand for used vehicles, specialist automotive parts and servicing as well as an ageing UK vehicle parc, which continues to support aftermarket activity.

The transition towards EVs remains one of the most influential trends. Battery electric vehicle sales and used EV transactions have both grown strongly in recent years, creating opportunities for dealerships, parts suppliers, repair businesses and specialist service providers.

However, the story is not entirely one-sided. Whilst electrification is creating new revenue opportunities, businesses must also contend with changing technology, investment requirements, battery valuation considerations and ongoing consumer education. The winners are likely to be those businesses that can adapt quickly while continuing to provide customers with confidence and expertise.

The experience of online-only retailers has also highlighted the importance of balancing digital capability with customer experience. Whilst consumers increasingly begin their buying journey online, many still prefer to inspect, test drive and complete purchases in person. This has reinforced the strength of businesses operating successful omnichannel models.

What buyers look for when acquiring an automotive business

Despite wider economic uncertainty, there remains healthy demand from strategic buyers, private equity investors and acquisitive trade groups for quality automotive businesses.

Buyer interest is strongest in businesses with recurring revenue streams, including servicing and maintenance, aftermarket parts distribution, specialist repair operations, fleet and mobility services, and businesses with a clear strategy around EV transition. These businesses often offer greater earnings visibility and resilience, making them particularly attractive in the current market.

Investors are also looking beyond historic financial performance and placing greater emphasis on future positioning. If you can demonstrate strong management, loyal customers, a defensible market position and a clear growth strategy this will help attract the strong levels of interest.

If you are considering a sale, this creates opportunities to achieve attractive outcomes. However, buyers remain selective and are undertaking increasingly detailed due diligence before committing to transactions.

There are also opportunities for acquirers. Many areas of the automotive sector remain fragmented, particularly across servicing, repair, aftermarket distribution and specialist technical services. If you are pursuing growth through acquisition, opportunities continue to exist to build scale, strengthen capabilities and increase your market share.

How automotive businesses are valued

Valuations across the lower mid-market have remained relatively stable.

Recent Dealsuite data suggests automotive, transportation and logistics businesses are typically achieving valuations of around 4.4x EBITDA, with observed ranges generally between 3.9x and 5.1x EBITDA. The wider mid-market average across all sectors currently stands at 5.3x EBITDA.

Of course, automotive is a broad sector and valuation outcomes can vary significantly depending on the business model, size and growth profile of the company involved.

Businesses that can demonstrate strong recurring revenues, exposure to structural growth markets, high-quality earnings, diversified customer bases and experienced management teams continue to attract premium valuations.

Scale remains another important consideration. Market data continues to show that larger businesses typically command higher earnings multiples than smaller businesses due to their perceived lower risk and greater growth potential.

What does this mean for business owners?

The automotive sector continues to face challenges, including competitive pressures, ongoing investment requirements and changing consumer expectations. However, those same dynamics are also creating opportunities.

Quality businesses continue to attract strong interest where they can demonstrate resilience, recurring revenues and a clear route to future growth.

Whether you are considering an acquisition, planning for succession or simply exploring your strategic options, now is an important time to understand how these market trends are influencing value across the automotive sector.