Companies in this industry engage in retail sales of new and used passenger cars, light trucks, SUVs, and passenger and cargo vans. Major companies include AutoNation, Group 1, CarMax, Penske Automotive Group, and Sonic Automotive (all based in the US), as well as Inchcape plc (UK), Jardine Cycle & Carriage (Singapore), Porsche Piech Holding GmbH (Austria), and Tangshan Jidong Jiefang Automobile Sales (China).
Worldwide, automobile dealers generate more than $2 trillion in annual revenue, according to MarketLine. Leading countries for auto sales, outside the mature markets of the US, Europe, and Japan, include Brazil, Russia, India, and China (the BRIC nations). The Chinese automotive market, based on unit sales, is more than three times larger than the three other BRIC nations combined.
The US automobile dealer industry includes about 46,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $865 billion.
Consumer spending and interest rates drive demand for cars. The profitability of individual companies depends on the volume and mix of cars and services sold. Large companies can offer a wider selection of cars and have advantages in marketing, purchasing, and finance. Small companies can compete effectively by offering superior customer service or serving a local market. The US industry is highly fragmented: the top 50 companies generate less than 15% of revenue. About 45% of dealerships have fewer than five employees.
For vehicle sales, auto dealers compete with private market sellers,...