III. Industry Analysis
[Company Name] competes against other new and used car dealerships, as well as online-only auto dealers and private consumer sales.
According to a report by National Automobile Dealers Association, the car dealership industry is a fragmented one, as the majority of operators are single-location businesses and employ fewer than 20 people. The market is estimated to grow to over $1 trillion in five years. Since there are no truly dominant competitors, barriers to entry are not as high as many other industries, and a start-up can expect to have success in this growing market, [Company Name] is well-positioned for success. There is plenty of room in the industry particularly for conveniently located dealerships that cater to specific demographic trends and demands. In this industry, size does not necessarily mean an advantage, which bodes well for [Company Name].
Market Trends
The market in which [Company Name] will compete is experiencing a number of different trends.
Market-level trends:
- Flat growth. This market is expected to remain consistent, with a slight contraction of 0.1% annually.
- Success drivers. Customer satisfaction is what ultimately makes one dealership triumph while another fails. The experience a dealership’s customer has will ultimately determine whether or not they return and whether or not they refer others to the dealer.
- Electric Vehicle Adoption. There is a worldwide shift to electric vehicles, and consumers tend to make decisions on such a purchase quickly.
Firm-level trends:
- Inventory and Price. Dealers primarily compete on inventory diversity and vehicle prices, but also compete through warranty, credit offerings and sales experience.
- Customer service. Quality of customer service in the parts and repair business is a significant point of competition.
Customer-level trends:
- Decreasing customer loyalty. Only 8% of consumers are strictly loyal to a specific car brand and 57% of consumers are loyal to whatever brand that offers the best customer experience..
- Purchasing preferences. Customers are increasingly shopping online, including shopping for vehicles. While not all customers complete an automobile purchase online, many do use the internet to research and compare before making the final purchase decision.
