Business View Magazine
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it’s already sold. If a manufacturer raises prices, or arbitrarily changes
some part of the dealer-factory relationship regarding, for example,
warranty claims, or how payments are handled, the dealership has to
respond in a way that keeps its profit margin respectable.
Smith also says that there is a growing pressure on dealers to main-
tain their paid-for inventory. Largely because consumers are increas-
ingly looking for cars on the internet, rather than roaming through a
well-stocked auto stores, there “might be more consumer orientation
for on-demand types of purchases.” However, a lot of people still buy
impulsively, according to Smith, and factories benefit greatly from sell-
ing vehicles to dealers, so for the near future, inventory will still be very
important.
What other trends are taking place in the industry? Smith says, “We’re
seeing a few less single-point stores.” In the past, most dealerships
were small and usually family-owned. Now, there is a move towards
even greater consolidation. “Our percentage of group stores is on the
increase – where we see three, five, or even ten stores under one
common ownership. AutoNation is a publicly owned company that has
68 stores in Florida. We have a large number of stores that are owned
by private entities that own stores in other states.”
Even with car prices going up – approximately 3 percent a year –
Smith says that the current market is excellent. “In the downturn, we
went down to $35 billion in Florida sales. We came out of that very
rough period of 2008 and ’09 when we actually lost members to the
economy. Today, our guys are recovering. We’ve had steady growth in
the last couple of years.”
The relationship between the nation’s new car and truck dealerships
and the overall economy is powerfully interdependent. One can see by
the large percentage of state sales taxes paid to Florida’s capital each
year by the new car and truck industry, that when the state’s dealer-
ships are doing well, the citizens of Florida benefit. Similarly, when the
overall economy is weak, new car and truck sales decline precipitously.
That is why the FADA is such an important organization – not only for
its members, but because the industry it represents drives Florida’s
economy in a very big way.
