New Car Dealers in the US - Industry Market Research Report

New Car Dealers in the US - Industry Market Research Report

  • September 2021 •
  • 38 pages •
  • Report ID: 198888 •
  • Format: PDF
Just like new: Demand for industry products will likely increase as the economy recovers

Abstract

New Car Dealers in the US

The New Car Dealers industry is highly fragmented and experiences a very low level of market share concentration. In 2019, the four largest industry operators are expected to account for just 5.0% of total industry revenue. Top companies include AutoNation Inc., Sonic Automotive Inc., Penske Automotive Group Inc. and Group 1 Automotive Inc. Consolidation has gained pace over the past five years, with larger publicly traded dealership groups absorbing small dealerships.

Licensing fees and regulations raise barriers to entry

· The New Car Dealers industry has moderate barriers to entry. Prospective operators must be prepared to comply with state regulations, manufacturer franchise agreements and start-up costs. Every state has different licensing requirements and regulations for new car dealers. Additionally, dealer licenses and franchise agreements must be renewed annually. Franchise fees, which vary by brand, number of stores and distance from other franchises, cost an average $25,000 per year, with reduced fees for dealerships owned by women or ethnic minorities. Most car makers limit the number of franchises within metro areas, making it difficult for new businesses to attain a franchise agreement. The industry also requires high upfront capital investment in inventory purchases and dealership lots.

Vehicle prices and customer service drive competition
· Operators in the New Car Dealers industry experience stiff competition, particularly in large metropolitan areas, where there are dealers of every car brand and even multiple dealers selling the same make. Dealers principally compete on new vehicle prices but also compete through warranty, credit offerings and sales experience. Quality of customer service in the parts and repair business is a significant point of competition within a franchise’s dealer network; poor customer service can drive customers to other dealerships within the franchise to get their car serviced without violating manufacturer warranties. Dealer groups are able to operate on lower profit due to cost-savings from marketing expenses, improved credit terms and inventory management.

Operators in the New Car Dealers industry sell new and used passenger vehicles. Vehicles include passenger cars, light trucks, sport utility vehicles (SUVs) and passenger vans. New car dealers also sell parts and provide repair services.

This report covers the scope, size, disposition and growth of the industry including the key sensitivities and success factors. Also included are five year industry forecasts, growth rates and an analysis of the industry key players and their market shares.
Loading...

We are very sorry, but an error occurred.
Please contact [email protected] if the problem remains.