The EV dealer of tomorrow is going to look remarkably different to the dealer of today. EVs will fundamentally change the franchise dealership landscape. Along with the significant investment in infrastructure required, the EV Dealer of the Future will look remarkably different to the franchise dealer of internal combustion engines (ICE) of today.

A limited supply of vehicles is achieving what the agency sales model sets out to do. After the two most profitable years ever in the automotive industry, we have learned a valuable lesson; limited supply leads to a dramatic increase in profitability for the entire automotive supply chain (OEMs, distributors and retailers).

Gross Margins As already discussed, Gross Margins are currently inflated on both new and used cars as there is reduced supply. Gone are the days of losing money on the metal only for the manufacturer bonuses and incentives to make up the majority if not all the gross profit for the month. The current margins […]

As touched on before, the supply of new vehicles to the Australian market is constricted. The constricted supply and recent surges in demand have pushed prices and gross margins to the highest on record, not only in new vehicles but also in the used car market. Speaking with our dealer clients, stock is limited, new orders face large wait times and average days inventory is down significantly from pre-pandemic levels.

Semiconductors Car manufacturers have suffered from a shortage of semiconductors since 2018 due to trade wars and then raw material shortages that were exacerbated by three separate factory fires, the Pandemic and other natural disasters. The auto manufacturers made the situation worse when facing dramatic declines in sales at the onset of the pandemic they […]

The key macroeconomic conditions that will provide headwinds for dealers in the next 12 months have been identified.

As the automotive industry continues to evolve and change and there are a number of trends emerging which impact dealership values, some of our key observations are as follows:

In the past two and a half years (since Q4 2019), we have experienced the following:

Thanks to current high and estimated future profits, there are many dealer groups and investors looking to acquire dealerships. Automotive dealerships have proven to be excellent investments in both good and bad economic times.