How AI, China, and retail complexity are rewriting M&A math
On this episode of Inside M&A, Dave Cantin, Founder, CEO, and Chairman of Dave Cantin Group (DCG), walked through the mid-year update to the company’s 2026 Market Outlook Report, which points to Chinese-made vehicles, AI’s growing role in car shopping, and an active M&A market as major forces reshaping the industry.
The report tracks five major themes shaping M&A in the second half of 2026:
- Consumer Power Grab
- Product Is the Story
- Complexity in Retailing
- China’s Global Impact
- 2026 M&A Trends
Chinese automakers gaining ground
One of the more surprising findings in DCG’s Market Outlook Report focused on Chinese-made vehicles. The survey found that consumers are open to buying Chinese vehicles, and price wasn’t the only factor. While Chinese automakers have built their appeal on delivering more value at a lower cost, Cantin said he saw this firsthand during a recent trip to Europe.
“It’s not do we think they’re ever going to come into the U.S., it’s when.”
That shift has come at the direct expense of European brands’ market share, with the global influx of Chinese-made cars growing much faster than Japanese imports did in the past. For example, Hyundai took 20 years to reach 10% market share, while Chinese automakers have done so in just 4 years, he said.
Although Chinese-made vehicles are effectively banned in the U.S., Cantin said domestic automakers are paying attention. He pointed to reports that Ford CEO Jim Farley has been driving a Chinese-made vehicle to study the competition firsthand. Cantin said it’s inevitable that Chinese automakers will eventually sell vehicles in the US, but it’s unclear when that could happen.
AI impacting dealer negotiation time
Additionally, AI tools have become the most important research resource for car shoppers. Consumers are now arriving at the dealership already knowing what a fair price and trade-in value should look like. But that preparation is shrinking the negotiation window dealers used to count on. Cantin said that, as a direct result, margin compression is one of the most common concerns dealers raise with him right now. If a dealer gives up margin on the front end just to win the sale, that margin has to be recovered somewhere else in the business.
“Dealers need to be more prepared to come out with their best price right off the bat… because consumers are way more prepared than they ever have been before.”
F&I is where Cantin said dealers can make up that difference. Offices need to maximize profitability by offering the right products for each consumer and each vehicle sold, rather than applying a one-size-fits-all approach to every deal. The strategic response, according to Cantin, is to lead rather than react. Dealers need to present their best price and trade-in offer up front, then protect margin elsewhere through F&I profitability and fixed operations absorption rate, which he called the top metric in today’s buy-sell M&A evaluations.
Inventory adds to the pressure
The relationship between dealers and manufacturers has moved well beyond inventory allocation. OEMs now direct which lead management, CRM, and DMS systems dealers use, along with broader guidance on running the business. Cantin stopped short of calling it a full agency model, but said it functions like one, and dealers are reluctant to push back given how much their margins depend on staying aligned with manufacturer programs.
That pressure compounds with an inventory problem. Cantin said dealers are telling him that they don’t have room to hold current stock, driven largely by an EV oversupply that hasn’t found the demand hybrid models have. He pointed to Toyota’s hybrid-first approach as a strategy other automakers now wish they’d followed.
Dealers need to stay closely coordinated across service, sales, and third-party vendors, Cantin suggests. He also says the industry needs to push manufacturers toward building vehicles that deliver real value for the dollar rather than just more features.
Buyers hold the advantage in today’s M&A market
According to Cantin, buyers have become much more strategic in recent M&A cycles. Enhanced FTC scrutiny, such as demanding six months of a dealership’s past advertising records to verify compliance, has introduced additional due diligence steps. Now, buyers focus on top-line revenue and potential net profit after applying their systems, instead of using a fixed multiple based on current profits. “Every time a dealer holds on to a losing asset… they say the same thing every time: why didn’t I do this years ago?” Cantin said.
Dave Cantin Group uses its Jump IQ artificial intelligence tool to identify off-market acquisition targets, and buyer opportunities focused on clustering deals in already strong markets have reached an all-time high in 2026. Looking ahead, Cantin expects the fixed ops absorption rate to remain the top metric buyers evaluate, and a wave of generational ownership transitions as dealers who held on through the years following the COVID-19 pandemic decide it’s finally time to sell.