Struggling Auto Market Means Consolidation

The auto market's struggles isn't just about dealerships closing, it's also resulting in tremendous consolidation.

Major Fortune 500 companies owning dealerships isn't new (AutoNation, Sonic Automotive), but now smaller groups are seeing the current state of the auto industry as an opportunity to expand.

Family-owned car dealerships are hit the hardest in these times. They don't have the resources to keep going, to feed the family, without the constant stream of revenues.

Some families just keep growing. Ed Bozarth recently purchased another Chevrolet dealership in Las Vegas. Once a small dealership, he's taken on his ninth location.

What do the small-guys do? It's not easy. Even if they want to purchase another dealership to stay in the business, getting the appropriate financing is difficult. How many financial institutions, already hit hard by the market, will want to loan money to someone looking to invest further in yet another struggling industry?

I expect to see further and further consolidation of the car dealerships in the United States. This will affect the industry on the whole. Will customers have fewer choices? Will this translate to more service problems? Fewer savings? Let's hope not. The industry needs good news, not bad.

It'll affect suppliers to. From parts, consultants, publishers, website providers...the list goes on. As the dealers consolidate, so may their partners.

-- D.S.