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Drive to Success: Consolidation Woes Leave No Room for the Little Guy

by Lindsay Lauck
on March 2, 2020

Among the many key issues automotive dealers have tackled in the past decade—the Great Recession, Margin Compression, Staffing Struggles—a new challenger has emerged. Fueled by digital disruption and the changing habits of consumers, small to mid-sized dealers are facing pressure to consolidate and cash out to larger retail groups. Is there truth in the data, or is this simply a trend that will eventually fade?

1 – Cox Automotive Insight Report Respondents Predict Car Dealership Consolidation

AM Online: A Cox Automotive Insight Report predicts 10% of dealerships (in the UK) to close in five years. As more dealers embrace digital retailing trends in an effort to increase profitability, this growing trend of consolidation can be viewed as a method of improving efficiency.

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2 – Changing Retail Market Prompts Some Dealers To Get Bigger Or Get Out

Auto Remarketing: Digital disruption and Mobility-as-a-Service (MaaS) are fueling a growing buy/sell market in the retail auto dealership space.

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3 – As Dramatic Disruption Comes to Automotive Showrooms, Proactive Dealers Can Benefit Greatly

McKinsey & Company: Price-competitive business models from new players in the market are simplifying the buying process for consumers. Plus, dealerships continue to deal with staffing struggles and operational efficiencies that weigh heavily on consolidation pressures.

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4 – Alert to Dealers: Plan For Your Future, or Plan to Cash Out

AutoNews: The advice from advisory firms looks like this: have a 20-year plan and stick to it, or plan to sell. Should dealers start to panic now or debate the data?

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5 – Car Dealerships Face Conundrum: Get Big or Get Out

The Wall Street Journal: New, innovative technologies, like ride-share service giants Uber and Lyft, are having a huge impact on new and used auto sales. Financial experts are beginning to warn small, independent dealers that it’s time to join forces with their larger counterparts.

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Tags: Consolidation, DMS, Drive to Success, Margin Compression

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