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Consolidation Continues in Retail Auto Industry, NADA Says

13 January 1999

Consolidation Continues in Retail Auto Industry, NADA Says

    WASHINGTON, Jan. 12 -- Consolidation in the retail automotive
industry continued in 1998, as the number of franchised dealerships declined
and those that remained grew larger, according to the National Automobile
Dealers Association. Despite the consolidation, NADA says most dealerships
still face intense intra-brand competition in their local markets.
    "The desire to take advantage of economies of scale is a major force
behind the industry's consolidation movement," said NADA chief economist Tom
Webb.
    NADA estimates the number of new auto dealerships in the United States
fell by 200 in 1998 to 22,400. While the number of dealerships declined, the
number of large dealerships -- those selling more than 750 vehicles per year
-- rose 2 percent in 1998 and is up 30 percent since 1994. The number of
dealerships selling fewer than 150 new vehicles declined 3 percent in 1998 and
dropped by 22 percent over the past four years.
    Much of the consolidation is due to the growth of privately owned chains.
There are currently 2,900 dealer chains, 100 more than at the start of 1997.
Chain groups now represent 40 percent of all dealerships.
    While public companies have drawn significant attention by their recent
growth, they still comprise only a small portion of the industry, accounting
for only 2 percent of all dealerships and just under 4 percent of total sales.
    The National Automobile Dealers Association represents more than 19,500
franchised new-car and -truck dealers holding nearly 40,000 separate
franchises, domestic and import.