Could the decline in sales among franchise dealers trigger more dealer consolidation?
That is the question DesRosiers Automotive Consultants (DAC) asked in an update, noting that the market collapse stemming from the pandemic has paved the way for significant declines in sales per new car franchise.
“During the first half of 2020 most brands have seen sales per dealer franchise fall in the range of 30-40%,” said DAC. “Toyota led the industry at 277 sales per dealer in the first half of 2020, a drop of 36.5%. Other brands have not fared as well with Infiniti dropping almost 60% to 56 units per franchise in the first half of 2020 — or only approximately 2 vehicles per store per week.”
DAC said its data indicates a noteworthy concentration in dealer ownership in Canada within the past decade. Although it is true that the number of dealer franchises have grown over this period, there has been a greater concentration on owning more franchises; in fact, dealer groups owning 10 or more stores have a larger and larger share of this network.
“The impact of the pandemic will undoubtedly serve to reinforce this trend,” said DAC. “The question remains as to who the purchasers will be, and the extent that industry consolidation of the dealer network will lead to new models of retailing, and a new balance in the relationship between factories and their networks.”
