Megadealers versus mega-automakers
We've documented the growing concentration in the auto manufacturing business. But here again the principle applies that oligopolies breed oligopsonies. That's been happening in the auto dealer segment over the past few years. So-called megadealers have expanded their ownership of auto dealerships across the country, giving these companies a bit of an edge in dealers with the big manufacturers. The megadealers are still not dominant and there are still plenty of small chains and independents, but the trend is unmistakable.
Among the top companies are:
- AutoNation, formerly known as Republic Industries, owns 370 dealerships and $18 billion in sales
- United Auto Group owns 220 dealers and has expanded to Brazil and the UK. It has $8.6 billion in sales.
- Sonic Automotive owns 159 dealerships, along with 40 collision repair facilities, and has about $7 billion in revenue
- Asbury Automotive Group owns 100 dealerships with $4.7 billion in revenue
- Group 1 Automotive, with 80 dealerships across the country, with sales of $4.5 billion.
- Lithia Motors owns 125 dealerships and has $3.4 billion in income
All this sounds impressive but there are some 20,000 plus dealers in the US, so it's still a very small proportion. On the other hand, ten years ago the industry was far more fragmented. The top six companies now sell nearly a million vehicles between them each year.
The big automotive manufacturers have looked with distress at the megadealers, and, in some cases, have tried to limit the number of their brand dealerships any one company can own. But we think further concentration is inevitable. While these dealer chains have slowed down their rate of acquisition this year as they try to concentrate on profits, there's no reason to believe that at least some of them wil, in their long-term best interests, continue to grow.
6:37:56 PM 
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