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Remember the days when buying a car meant haggling with a dealer over prices and options? 

While some of that remains, the landscape of car dealerships in the United States is undergoing significant changes. From evolving consumer behaviors to technological advancements, the traditional dealership model is adapting to meet new demands. 

Let's explore the current state of the U.S. car dealership industry and what it means for both consumers and investors. 🚗

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INDUSTRY BREAKDOWN

Driving Profits: The Future of Car Dealerships in the U.S. 🏁

Car dealerships have been the go-to for vehicle purchases in the U.S. for over a century. The traditional dealership model, where manufacturers rely on independently owned franchises, has been cemented by state laws prohibiting direct manufacturer-to-consumer sales. While this has given dealerships a stronghold in the market, the industry is shifting gears, with digital disruption, evolving consumer preferences, and direct-to-consumer (DTC) sales challenging the status quo. 

As of today, there are roughly 16,500 new car and truck dealerships across the U.S., generating billions in annual revenue. Inventory levels are rebounding after pandemic-induced shortages, with average discounts on new vehicles rising 25% year-over-year to $3,400 in December 2024. However, potential import tariffs could drive up vehicle costs by as much as $12,000, putting pressure on affordability and dealership margins. 

Meanwhile, the used car market remains hot, with elevated prices due to limited supply. Lease returns have slowed, and more consumers are holding onto their vehicles longer, creating an inventory squeeze. At the same time, EV sales are growing, but two-thirds of dealerships still lack electric or hybrid vehicle inventory, meaning there’s still significant room for expansion in this segment.

The key takeaway? The U.S. car dealership industry isn’t dying - it’s just evolving. While traditional dealerships still dominate, businesses that embrace online sales, digital financing, and EV adoption will be better positioned for the road ahead. 🚘

Want the full industry deep dive? Check it out here.

Check out these Car Dealerships for sale:

1. New and Used Cars and Golf Cart Product Lines in Virginia Beach, VA - $3,500,000

2. Independent Honda and Acura Sales and Service in Berlin, CT - $3,950,000

3. Next-Gen Auto Hub: All-in-One Franchise + SaaS Power in Tulsa, OK - $15,000,000

Interested in a particular industry? Reply to this email with the industry you are curious about and keep your eyes peeled in upcoming issues. 👀 

DEAL REVIEW

Auto Dealer Group with New and Pre-Owned Sales, Service & Financing

This business is a well-established, fully managed family owned and operated auto group Providence County, Rhode Island.

Deal Facts 🔥

Green Flags 🟢

• Diverse Revenue Streams – The business generates income from new and used car sales, service and repairs, warranties, a body shop, detailing, and an in-house financing company, making it well-diversified and less dependent on a single source of revenue.

• Strong Brand and Market Position – With multiple locations, modern showrooms, and high visibility in prime car sales areas, the dealerships have built a reputable brand that attracts consistent customer traffic.

• Well-Managed and Fully Staffed – The business is fully managed with key employees and managers running daily operations, allowing a new owner to step in without needing to be hands-on immediately.

Red Flags 🔴

• Inventory Not Included in Asking Price – The cost of acquiring the necessary vehicle inventory could be a significant additional investment, making it important to factor into total acquisition costs.

• Leased Properties with Unknown Terms – The lease expiration details are not provided, which means a new owner may need to renegotiate terms, posing potential financial or relocation risks.

• Highly Competitive Industry – The auto sales market is highly competitive, requiring strong inventory management, aggressive marketing, and continued differentiation to maintain and grow market share.

Want to learn more about this deal? Reply to this email with a “send me more details” and we will connect you with the broker!

TWEET HIGHLIGHT

Finding a great business to buy can feel like searching for buried treasure - except the map is missing, and the X is nowhere to be found. But here’s the good news: the deals are out there, you just need to know where to look. Whether it’s networking, off-market strategies, or leveraging brokers, knowing how to source the right business is half the battle.

If you’re serious about buying a business, the first step isn’t just dreaming about it - it’s learning where to find the right opportunity. 💡💼

GOOD READS

Recommended Resources 📚

Below is a list of articles, books, and other resource we recommend for buyers or operators of small businesses!

1. Once you've acquired a business, it's crucial to understand its operations thoroughly before implementing changes. This article emphasizes the importance of learning about the customers, understanding employee roles, and avoiding immediate drastic changes. It suggests that new owners should "get in, get comfortable, get smart, and then get going."

2. Engaging the right professionals can significantly impact the success of your business acquisition. This article outlines key professionals to consider, including accountants, legal advisors, and business brokers, among others, to provide comprehensive support throughout the acquisition process.

3. First-time buyers often encounter pitfalls that can be detrimental to their success. This article highlights common mistakes such as inadequate preparation, overestimating synergies, and insufficient due diligence, offering insights on how to navigate the acquisition process more effectively.

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