Automobile dealerships have been mother and pop companies for a lot of their existence. However the trade is slowly consolidating.
Six publicly traded dealership teams — AutoNation, Lithia Motors, Group 1 Automotive, Sonic Automotive, Penske, and Asbury Automotive Group — have been on a procuring spree in recent times, shopping for up a small however rising share of dealerships. And so they’ve been wildly worthwhile.
Circumstances have been particularly optimistic prior to now couple of years. New automotive costs have hit report highs with components in brief provide and cars in excessive demand, particularly for Individuals who moved to suburban areas in the course of the Covid-19 pandemic and wanted their private autos for his or her fundamental mode of transportation.
The trials of the pandemic additionally compelled sellers to change into much more environment friendly. In consequence, sellers have been raking in greater earnings on each unit offered.
Corporations comparable to the 2 greatest corporations, AutoNation and Lithia Motors, have been, respectively, shopping for again large quantities of inventory and investing into extra acquisitions and different companies, comparable to on-line retail structure.
However they might face a tricky, uphill climb forward. Shoppers are getting more and more annoyed by the sellers’ excessive sticker costs and there are different shopping for choices: in style automotive manufacturers comparable to Tesla, Rivian and others are promoting automobiles direct to the patron and extra motorists are shopping for automobiles on-line.
However these publicly traded teams do have plenty of alternative to develop additional regardless of these components. At the moment, they solely management a small share of the market of greater than 16,000 dealerships.
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