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Car dealerships have become targets for cross-border investment — Economist.com

Discussion in 'TSLA Investor Discussions' started by mblakele, Jul 28, 2018.

  1. mblakele

    mblakele (つ ͡° ͜ʖ ͡°)つ

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    Consolidation of dealerships could have various effects on Tesla. More concentrated ownership of dealerships could mean more concentrated lobbying. However this trend could also make for dealerships that are more open to change.

    Car dealerships have become targets for cross-border investment

    Selected quotes:

    [...] the car market is changing in ways that favour consolidation. The spread of ride-hailing means fewer young city-dwellers are buying cars. Larger networks will be better placed to survive, says Andy Bruce, the boss of Lookers, since they have the scale to offer better deals on high-margin financing and insurance. Moreover, says Gianluca Camplone, a partner at McKinsey, a consulting firm, only the biggest dealerships will have the capital to invest in the equipment and training needed to service high-tech electric and, one day, autonomous vehicles.

    For manufacturers, consolidation may mean a loss of pricing power. But there is a consolation, says David Kendrick, who specialises in dealership transactions at UHY Hacker Young, an accountancy firm. Interacting with a few dozen networks will be more straightforward than dealing with lots of individual ones—though carmakers still usually seek to ensure that no retailer has more than 10% of a national market.

    The appeal of dealerships as an investment is boosted by their location, generally on major roads near retail centres. Such prime plots lend themselves to repurposing as industrial warehouses or e-commerce fulfilment centres, says Tim Savage of CBRE, a property company. Although interiors are tailored to the brands sold, the structure is frequently made of steel portal frames with internal partitioning that is easily redesigned. And it is often a condition of franchises that car showrooms are refurbished every three to five years, meaning they stay in excellent condition.​
     
  2. TexasEV

    TexasEV Well-Known Member

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    More concentrated ownership of dealerships would end the mythology of the dealer being a local small business who supports the Little League team, that would be harmed if big companies like Tesla are allowed to sell directly to consumers.
     
  3. mblakele

    mblakele (つ ͡° ͜ʖ ͡°)つ

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    Good point. I think that's already dead in California — or should be. Almost every dealership I can think of is part of a fairly large group, and has been for years. Some look like boutiques, but it's easy to find out that they're part of a larger group.
     
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