I chose consolidation for the first of my megatrends series, because it’s the least controversial. Everyone seems to know it’s happening, and the records and rankings in Automotive News are dominated by big groups.
Ten years down the road, we don’t want to be the 13-point dealership group feeling that pain from the larger groups the way the smaller ones are now
This year, for the first time, NADA Data takes a look at consolidation. Probably the best single number to look at is the ratio of rooftops to dealers, which represents the average number of stores in a dealer group. This has grown from 1.8 to 2.2 over the last nine years – not exactly a revolution. I was a little surprised to see such small numbers, but this is an artifact of how NADA presents the data.
NADA, logically enough, presents the number of dealers owning a group of a given size. I would have preferred to see the number of stores, not owners, in each category. This is a better reflection of the market coverage. To show the distinction, I plotted the total count of both rooftops and owners. You can see that, while the number of rooftops is recovering since 2010, the number of dealers is not.
Next, I recast the data in terms of rooftops. The number of rooftops belonging to groups of ten or more has almost doubled over the period, from 12.2% to 21.3%.
Below, I have plotted the number of rooftops in three tiers, by size of the dealer group to which they belong. The 2 to 10 tier has been remarkably stable, numbering roughly 8,200. The single points have been in steady decline, losing 2,500 over the period.
Dealers know that single points are vulnerable to market shocks and competitive pressure, if for no other reason than being tied to a single make. On present trends, we can expect them to vanish entirely within ten or fifteen years.
Virag Consulting 