There is a significant move away from traditional, one-store dealerships (which are mainly family-owned) and towards large multi-dealer groups in Canada.
There are a total of 3,000 new car dealerships in Canada. The number of dealerships with individual principal owners has shrunk by 1,000 during the past decade. Today some 85 groups own 900 dealerships. And this trend looks to continue.
The same has been happening in the U.S., where the average public dealer company has gone from 22 to 150 stores over the past decade.
Comments from Dennis DesRosiers of DesRosiers Automotive Consultants:
- It won’t be long before dealer groups control more than 50 per cent of Canada’s annual new vehicle sales (1.65 million units).
- Auto manufacturers in Canada are encouraging the best dealers to buy other outlets, particularly underperforming ones.
- In today’s world, stores need to become more sophisticated in their management, which is easier for larger groups with more capital.
 Comments from Vigen Ghazarian of Cormark Securities:
- Some manufacturers want to reduce their dealership base and increase volume per franchise, which would give store owners more money for investment and improvement of brand image.
- This trend to groups will accelerate, despite profitable dealerships under family ownership.
- Traditional family dealerships use legacy systems and processes with sales-force productivity that are the same today as 20-30 years ago. The days of success with such methods are numbered.
Read this here.
Tags: auto industry
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