Automobile Dealers
Description
Companies in this industry engage in retail sales of new and used passenger cars, light trucks, SUVs, and passengers and cargo vans. Major companies include AutoNation, CarMax, Group 1 Automotive, Penske Automotive Group, and Sonic Automotive (all based in the US), as well as Inchcape plc (UK), Jardine Cycle & Carriage (Singapore), Pang Da Automobile Trade (China), and Porsche Holding Salzburg (Austria).
Worldwide automobile sales grew to around 75 million automobiles in 2024, up by about 2.5% from 2023, according to the European Automobile Manufacturers' Association. China is the largest automobile market based on sales with around 30% of the total world car market.
The US automobile dealer industry includes about 50,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $1 trillion.
COMPETITIVE LANDSCAPE
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 service a local market. The US industry is highly fragmented: the 50 largest firms generate about 20% of revenue.
For vehicle sales, auto dealers compete with private market sellers, who are increasingly using the internet to bypass traditional retail channels. Companies compete with various retail outlets, such as oil change centers, tire stores, and independent service shops and chains, for service revenue.
Automotive vehicle imports to the US amounted to about $220 billion in 2024, according to Worlds Top Exports. Top importers include Mexico, Japan, Canada, South Korea, and Germany.
PRODUCTS, OPERATIONS & TECHNOLOGY
Sales of automobiles and light-duty trucks account for about 80% of revenue, while parts and supplies account for about 5%. In addition to cars, dealerships commonly offer parts and accessories, maintenance and repair services, financing plans, extended warranties, and insurance.
New car dealers have franchise agreements with car manufacturers, which give dealerships nonexclusive rights to sell certain brands of cars and offer related parts and services within a specified market area. Franchise agreements typically impose various requirements for operations, including inventory levels, working capital, sales practices, showrooms, service facilities, and monthly reporting. Multiple franchise agreements with different car manufacturers allow dealers to offer a broad range of vehicles.
Dealers acquire new vehicles from manufacturers through an allocation system based on historical sales, and typically have limited influence over the colors and features of cars received. Companies buy used vehicles from a variety of sources, including trade-ins, auctions, other dealers, leasing companies, and rental companies. To set a price for a trade-in, used dealers consider a car's age, mileage, and condition to develop an appraisal. Used vehicles may require reconditioning prior to sale; vehicles unfit for retail resale are generally sold through wholesale auctions. Some manufacturers allow dealers to sell certified pre-owned (CPO) vehicles with extended warranties.
Worldwide automobile sales grew to around 75 million automobiles in 2024, up by about 2.5% from 2023, according to the European Automobile Manufacturers' Association. China is the largest automobile market based on sales with around 30% of the total world car market.
The US automobile dealer industry includes about 50,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $1 trillion.
COMPETITIVE LANDSCAPE
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 service a local market. The US industry is highly fragmented: the 50 largest firms generate about 20% of revenue.
For vehicle sales, auto dealers compete with private market sellers, who are increasingly using the internet to bypass traditional retail channels. Companies compete with various retail outlets, such as oil change centers, tire stores, and independent service shops and chains, for service revenue.
Automotive vehicle imports to the US amounted to about $220 billion in 2024, according to Worlds Top Exports. Top importers include Mexico, Japan, Canada, South Korea, and Germany.
PRODUCTS, OPERATIONS & TECHNOLOGY
Sales of automobiles and light-duty trucks account for about 80% of revenue, while parts and supplies account for about 5%. In addition to cars, dealerships commonly offer parts and accessories, maintenance and repair services, financing plans, extended warranties, and insurance.
New car dealers have franchise agreements with car manufacturers, which give dealerships nonexclusive rights to sell certain brands of cars and offer related parts and services within a specified market area. Franchise agreements typically impose various requirements for operations, including inventory levels, working capital, sales practices, showrooms, service facilities, and monthly reporting. Multiple franchise agreements with different car manufacturers allow dealers to offer a broad range of vehicles.
Dealers acquire new vehicles from manufacturers through an allocation system based on historical sales, and typically have limited influence over the colors and features of cars received. Companies buy used vehicles from a variety of sources, including trade-ins, auctions, other dealers, leasing companies, and rental companies. To set a price for a trade-in, used dealers consider a car's age, mileage, and condition to develop an appraisal. Used vehicles may require reconditioning prior to sale; vehicles unfit for retail resale are generally sold through wholesale auctions. Some manufacturers allow dealers to sell certified pre-owned (CPO) vehicles with extended warranties.
Table of Contents
- Industry Overview
- Quarterly Industry Update
- Business Challenges
- Business Trends
- Industry Opportunities
- Call Preparation Questions
- Financial Information
- Industry Forecast
- Web Links and Acronyms
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