Global Automotive Dealer Industry
The automotive dealer industry is a part of the automotive service sector.
The world automotive retail industry was worth close to $5 trillion in 2011, having recorded yearly growth of more than 2% for the four preceding years, reports MarketLine. Auto dealers represented the leading market segment, generating more than $2 trillion in 2011, equivalent to almost 44% of the overall market. Industry growth is expected to accelerate to a yearly rate of 8% between 2011 and 2016, bringing the market to more than $7.2 trillion.
While the global passenger car sector was badly hit by the economic crisis, dealer sales are witnessing recovery thanks to increasing employment and rising levels of consumer income. Global Industry Analysts underlines the role played by governments in helping fuel market expansion through the launch of initiatives that see new cars replace old cars, and the introduction of financial packages for automotive manufacturers in difficulty.
Recovery in end-use markets sectors (such as transportation and construction) drove commercial vehicle sales in 2010. Increasing automotive production and a rising number of vehicle miles traveled and the resulting wear-and-tear on vehicle parts improved business prospects for outfits dealing in automotive components and parts. A greater degree of vehicle maintenance, rising levels of income and improvement in aftermarket purchases also helped market conditions for component dealers and related service providers.
- The new car dealer sector witnessed a dramatic fall in new vehicle sales over the five-year period ending 2012. In the face of declining sales, new car dealers relied more on parts and service departments as a source of revenue. This trend will continue, with an increasing number of new car dealers orienting their business models to selling parts and services in a bid to spur recovery. More drivers are expected to trade in their cars in favor of new models that can better meet their fuel efficiency needs. New car dealers provide parts and repair services, and sell sport utility vehicles, passenger vans, light trucks and passenger cars.
- The global used car dealer industry fared the recession better than the new car dealer market due to its in-house financing arrangements. As economic recovery continues, new car dealers will become an increasingly strong competitor, encroaching on used car dealers’ market share. It is yet to be seen to what extent new legislation on financing practices will affect the market. Used car dealers sell passenger vehicles such as vans, sports utility vehicles, cars and light trucks. Apart from vehicle sales, used car dealers also provide customers with financing and insurance services.
The global automotive dealer sector will continue to benefit from state incentives worldwide, and the roll out of new models such as alternative vehicles, which will fuel demand in the automotive dealer market, reports Global Industry Analysts. As manufacturers focus increasingly on long-term thinking to spur recovery following the economic recession, the market will witness the introduction of more technology specifications and an increasing number of innovative designs. Market growth will be driven by performance factors like fuel efficiency, lower emissions and reliability as well as rising popularity of models with advanced safety features and intelligent navigation technologies. The ability of manufacturers to meet consumer demand for vehicles offering a greater degree of style and luxury will also come into play.
Players operating in the global automotive market will need to focus on developing new marketing strategies to capture market share. Online sales promotions represent one instance of new marketing strategies, allowing the automotive market to tap into a specific consumer segment of internet users. New age automotive dealers will increasingly employ online sales strategies to capture greater market share.
The world automotive market will witness increasing demand for passenger cars in developing countries such as India, China and Brazil. Automotive dealers will see these emerging nations become an increasingly significant source of revenue, compared with mature markets in the US, Western Europe and Japan.
Leading Industry Associations
- National Automobile Dealers Association www.nada.org
- Canadian Automobile Dealers Association www.cada.ca
- American International Automobile Dealers Association www.aiada.org
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