Car buyers who have been purchasing their cars from the same dealership for generations could see a different kind of for-sale sign the next time they visit. Small to mid-size dealer groups are selling their businesses to car-retail giants or investment firms.
Dealers say that they need to get triple revenue in the next 5 years to offset shrinking margins and increasing competition from companies that did not exist a decade ago. The internet has made the field very tough, by making car prices more transparent for customers and giving them the opportunity to shop around. It has also enabled the online shopping for used cars. Tesla is using online ordering to overcome dealerships entirely. And Uber imagines a world where more people will use ride-haling apps instead of owning a car.
These developments have helped fuel consolidation of the 16.800 U.S. dealerships into the hands of fewer owners. The top 50 dealers are set to gain more than $175 billion in revenue this year if to compare to $144 billion four years ago.