The number of car dealerships in the U.S. remained relatively stable in 2021, but fewer companies own them. That’s the conclusion Automotive News reached in its annual study of the dealership industry.
Car dealerships were once mostly local businesses. But, today, large conglomerates routinely operate dozens of dealers, stretching across multiple states and selling cars of every brand. AutoNation, America’s largest dealership group, owns more than 300 dealerships across 18 states and employs more than 21,000 people.
The dealership industry is increasingly consolidating, with big dealership groups buying out local operations.
More Cars Sold by Fewer Companies
AN reports that, in 2021, the ten largest accounted for 9.3% of all new car sales nationwide – up from 8.5% in 2020. 2021’s total may even be an undercount – it doesn’t account for sales by some dealerships acquired during the year.
The 150 largest sold nearly a quarter of all cars and saw their market share grow by more than 1% last year.
AN expects consolidation to continue, noting, “Several dealers who acquired stores in 2021 told Automotive News more deals are in the cards for 2022.”
What it Means for You
For car shoppers, the news has mixed meanings.
On one hand, buyers can expect a more consistent experience from dealership to dealership. Large dealership groups may have more consistent policies and sales practices. As new car prices have risen throughout the last year, some dealers have begun adding significant markups to the cost of new cars.
That has automakers pushing back, with Ford, General Motors, Subaru, Hyundai, and Nissan all recently warning their dealerships against shady pricing and leasing tactics.
On the other hand, consolidation could rob buyers of the single most powerful tool in their negotiating toolkit: local competition. When threatened with a hefty markup, shoppers can always walk away, confident that another dealership within a reasonable drive can sell them the same car. That grows less and less true each year.
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