Industry Analysis & Industry Trends
Over the five years to 2016, increased discretionary spending and elevated confidence have led consumers to once again pursue big-ticket items, such as new vehicles. In addition, interest rates have plummeted, making the cost for consumers to finance vehicles relatively more affordable. In the five years to 2021, revenue for the New Car Dealers industry is forecast to grow. Continued gains in consumer confidence will drive the industry's recovery and increased discretionary spending will support greater demand for cars, SUVs and light trucks. Moreover, new vehicle introductions will drive consumer traffic to car dealers, thus aiding revenue growth... purchase to read more
Industry Report - Industry Investment Chapter
New car dealerships require salespeople, technicians and office workers to operate. Labor costs have been volatile over the past five years. For example, wages are expected to account for 6.9% of industry revenue in 2016, down from 7.5% in 2011. This segment's decline has been were largely due to wage growth not keeping pace with revenue growth. Additionally, many industry operators are incorporating inventory management systems, which is further reducing the need for labor.
Furthermore, industry depreciation costs are low. By classifying vehicles as short-term assets, new car dealers tend to avoid significant depreciation expenses. Service equipment and the physical dealership are the industry's primary long-term assets... purchase to read more