Analyst Gives Postive Outlook for Auto Dealer and Auto Rental Sectors
5 October 1999
Robertson Stephens Analyst Gives Postive Outlook for Auto Dealer and Auto Rental Sectors
NEW YORK--Oct. 4, 1999--Investors at Firm's 1999 Consumer Conference-
Robertson Stephens Automobile Services Analyst Jordan Hymowitz today gave his outlook for the auto dealer and auto rental sectors.
At the firm's 1999 Consumer Conference, which will be held today through Wednesday in New York, Hymowitz said trends are improving for auto dealers and rental car companies.
"Over the past few years, auto retailers have generally not performed well, with the exception of last year's outstanding performance," said Hymowitz. "Although this year most retailers are again flat or down, trends in auto retailing are improving significantly."
Hymowitz highlighted several trends benefiting auto dealers:
| -- | Consolidation: Auto dealers are focused on consolidating, with larger, well-capitalized companies entering the dealership business, and on taking costs out of their system, not on revolutionizing or changing the way cars are sold. |
| -- | Improved consumer purchase experience: Consumers are happier purchasing a car today than they've been in the past 15 years. There is a nearly 65 percent favorable reaction from people purchasing a vehicle today. |
| -- | Geographic clustering: Since most of the synergies are within a given market, not between markets, companies are concentrating dealerships in one geographic area to increase profits. |
In the rental car sector, Hymowitz said that the central issue continues to be price: "The three things that drive stocks in the rental car sector, in order of importance, are price, price, price. Are prices going up among rental car companies, or are they going down? Prices have just turned the corner as all the rental car companies are raising their prices."
"Going forward, the challenge for the rental car companies will be raising prices without sacrificing market share. For the dealers, the question will be proving that they are not merely consolidating, but actually improving the performance of the acquired dealers," said Hymowitz.
Hymowitz, a principal and senior equity analyst, joined Robertson Stephens in 1997, and focuses on the auto services and specialty finance industries.
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