Car dealerships have been mom and pop businesses for most of their existence. But the industry is slowly getting stronger.
Six publicly traded dealership groups – AutoNation, Lithia Motors, Group 1 Automotive, Sonic Automotive, Penske and Asbury Automotive Group – have been on a buying spree in recent years, buying out a small but growing portion of dealerships. . And they’ve been wildly profitable.
Circumstances have been particularly positive in the last few years. New car prices have hit record highs with parts in short supply and automobiles in high demand, especially for Americans who moved to suburban areas during the COVID-19 pandemic and used their main means of transportation. He needed his own personal vehicles.
The trials of the pandemic also forced dealers to become more efficient. As a result, dealers are making higher profits on each unit sold.
AutoNation and Lithia Motors, the two largest firms, are buying back massive amounts of stock and investing in more acquisitions and other businesses such as the online retail architecture, respectively.
But they may face an uphill, uphill climb ahead. Consumers are increasingly frustrated by the high sticker prices of dealers and other buying options: popular car brands such as Tesla, Rivian and others are selling cars directly to consumers and more motorists are buying cars online.
But despite these factors, these publicly traded groups have a lot of opportunity to expand further. Currently, they control only a small portion of the market of over 16,000 dealerships.
Watch the video to learn more.