Slamming the breaks: Rising interest rates and falling consumer confidence will prevent industry growth

The New Car Dealers industry in California has experienced steady, moderate growth over the five years to 2017. Consumer income and confidence growth has led consumers to purchase new durable goods, such as vehicles. However, operators have struggled with increased competition and thin profit margins. The previously seen robust demand growth is expected to come to an end over the next five years as consumer confidence falls slowly. At the same time, interest rates are expected to increase, causing the effective price of new vehicles to increase since most vehicles are bought on credit...read more.

Industry Statistics & Market Size
Revenue
$104bn
Annual Growth 12-17
5.1%
Forecast Growth 17-22
Profit
Employment
117,547
Businesses
1,951
What Our Customers Say

Industry Threats & Opportunities

  • Robust demand growth is expected to come to an end over the next five years as consumer confidence falls slowly
  • Consumers' ability to research, compare and buy vehicles online has significantly increased the level of competition
  • Slowing demand and continued high competition level will lead to industry exit
  • Industry Report - Starting a New Business Chapter

    Barriers to entry into California's new car dealer industry are moderate and steady. To open a car dealership, a new entrant must purchase inventory, lease a sales space and get a dealer license from the state of California. Acquiring a license requires submitting to a background check, which investigates not only crimes but also any instances of “moral turpitude” which could indicate the applicant would not be ethical in business operations. In addition, applicants must provide a franchise agreement, proof of bonding, a business license, photos of the dealership and more.Provided a new entrant can supply the required paperwork and pass a background and credit check, acquiring inventory is the largest barrier to entry. Mos...purchase to read more.

    Additional Insights for the New Car Dealers in California Industry

    IBISWorld identifies 250 Key Success Factors for a business.The most important for the New Car Dealers in California Industry are

  • Provision of superior after sales service
  • Use of high volume/low margin strategy
  • Internet presence
  • IBISWorld analysts also discuss how external factors such as Average age of vehicle fleet and Per Capita Disposable Income in California in the New Car Dealers in California industry impact industry performance..

    shopping_cartPURCHASE OPTIONS

    What is the New Car Dealers in California Industry?

    This industry sells new and used passenger vehicles. Vehicles include passenger cars, light trucks, sport utility vehicles (SUVs) and passenger vans. New car dealers also sell parts and provide repair services.

    Industry Products
  • New vehicles
  • Used vehicles
  • Parts and repair services
  • Finance and insurance
  • Industry Activities
  • Selling new cars
  • Selling new light trucks
  • Selling used cars
  • Selling used light trucks
  • Providing vehicle maintenance and repairs
  • Table of Contents

    Industry Definition
    Main Activities
    Similar Industries
    Additional Resources
    Industry Statistics Snapshot
    Industry Structure
    Executive Summary
    Executive Summary
    Key External Drivers
  • Average age of vehicle fleet
  • Per Capita Disposable Income in California
  • Consumer Confidence Index
  • Yield on 10-year Treasury note

  • Current Performance
  • Demand-driven growth
  • A swerve in purchasing habits
  • Service offerings
  • Chart: Revenue Growth

  • Industry Outlook
  • Demand growth hits the brakes
  • Profit and consolidation
  • Table: New Car Dealers in California Industry Revenue Outlook

  • Industry Life Cycle
  • Life cycle reasons
  • Chart: Benchmarking - New Car Dealers in California Industry Lifecycle vs The Economy

  • Supply Chains
    Key Buying Industries
  • Consumers

  • Key Selling Industries
  • Automobile Wholesaling
  • Car & Automobile Manufacturing
  • SUV & Light Truck Manufacturing

  • Products & Services
  • New vehicles
  • Used vehicles
  • Parts and repair services
  • Finance and insurance
  • Chart: New Car Dealers in California Industry Products and Services Segmentation

  • Major Markets
  • Consumers aged 50 or higher
  • Consumers aged 35-49
  • Consumers aged 16-34
  • Chart: Major Market Segmentation for the New Car Dealers in California Industry

  • Business Locations
    Chart: Business Locations by State
    Market Share Concentration
    Key Success Factors
    Cost Structure Benchmarks
    ProfitPurchasesWagesOther
  • Chart: Cost Structure Benchmarking – Sector vs New Car Dealers in California

  • Basis of Competition
  • Internal
  • External

  • Barriers to Entry
  • Table: Barrier to Entry Checklist for the New Car Dealers in California Industry

  • AutoNation Inc.Longo Toyota/ScionNorm Reeves SuperstoresPenske Automotive Group Inc.
  • Table: AutoNation Inc. - financial performance
  • Table: Longo Toyota/Scion - financial performance
  • Table: Norm Reeves Superstores - financial performance
  • Table: Penske Automotive Group Inc. - financial performance

  • Capital Intensity
  • Chart: Level of Capital Intensity for the New Car Dealers in California Industry
  • Chart: Tools of the Trade: Growth Strategies for Success

  • Technology & Systems
    Revenue Volatility
  • Chart: Volatility vs Industry Growth

  • Regulation & Policy
    Industry Assistance
    Table: Industry Data for the New Car Dealers in California Industry
    Includes:
  • Industry Revenue (2008-2022)
  • Establishments (2008-2022)
  • Businesses (2008-2022)
  • Employment (2008-2022)
  • Wages (2008-2022)
  • Per Capita Personal Income (2008-2022)

  • Table: Annual Percentage Change for Key Industry Data
    Table: Key Ratios for Industry Key Data
    Big Three
  • Industry term for the three largest domestic automakers: General Motors, Ford and Chrysler.
  • Floor Plan Financing
  • A type of financing used to fund purchases of vehicles intended for sale.
  • Light-Duty Vehicle
  • A passenger vehicle, sport utility vehicle or truck weighing less than 14,000 pounds.
  • Powertrain
  • A vehicle's engine and transmission combination.
  • Surety Bond
  • A three-party agreement in which the third-party, or surety, agrees to fulfill contractual obligations.
  • Term Asset-Backed Securities Loan Facility (Talf)
  • A Federal Reserve program that issues asset-backed securities collateralized by student loans, auto loans, credit card loans and loans guaranteed by the Small Business Administration.
  • Why buy this report?

    IBISWorld’s industry research report on New Car Dealers in California contains five-year forecasts and data analysis that can help you identify and mitigate risks in potential new markets. Position yourself as an expert with internal stakeholders by using our comprehensive industry research to inform your reports, proposals and presentations. Our business information will save you money by helping you make better decisions, faster.

    IBISWorld industry market research reports enable you to:
    • Find out about key industry trends
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    This report on New Car Dealers in California:
    • Provides Market Size information to assist with planning and strategic decisions.
    • Includes the necessary information to perform SWOT, PEST and STEER analysis.
    • Helps you understand market dynamics to give you a deeper understanding of industry competition and the supply chain.
    • Analyses key performance and operational metrics so that you can benchmark against your own business, that of your customers’ businesses, or your competitors’ businesses.
    The New Car Dealers in California market research report includes:
    • Historical data and analysis for the key drivers of this industry
    • A five-year forecast of the market and noted trends
    • Detailed research and segmentation for the main products and markets
    • An assessment of the competitive landscape and market shares for major companies
    • And of course, much more

    IBISWorld reports on thousands of industries around the world. Our clients rely on our information and data to stay up-to-date on industry trends across all industries. With this IBISWorld Industry Research Report on New Car Dealers in California, you can expect thoroughly researched, reliable and current information that will help you to make faster, better business decisions.

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