Brief Excerpt from Industry Overview Chapter:
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).
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.
PRODUCTS, OPERATIONS & TECHNOLOGY
Sales of new and used cars and related products and services by new car dealerships make up 90% of industry revenue; used car dealerships account for the remaining 10%. In addition to cars, dealerships commonly offer parts and accessories, maintenance and repair services, financing plans, extended warranties, and insurance.
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