Auto Service World
News   July 17, 2020   by Allan Janssen

Will Covid cause further dealer consolidation?

The latest issue of DesRosiers Automotive Report probes the connection between tumbling new-vehicle sales due to the current Covid-19 pandemic and further dealer consolidation.

According to analysts at DesRosiers Automotive Consultants, the impact of the partial lock-down of the economy seen sales-per-dealer-franchise fall in the range of 30-40%.

The dramatic declines in sales per franchise could have long-term implications for the new vehicle dealer network in Canada.

“During the first half of 2020 most brands haveToyota led the industry at 277 sales per dealer in the first half of 2020, a drop of 36.5%,” the report states. “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.

DesRosiers points out that over the past decade, there has been a notable concentration that has occurred in dealer ownership in Canada. To be sure, the overall number of dealer franchises has continued to grow. The ownership of these franchises, has been increasingly concentrated however, as dealer groups owning 10+ stores have taken a larger and larger share of the Canadian network. The impact of the pandemic will undoubtedly serve to reinforce this trend.”

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.

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