Recently, I had the opportunity to attend a dinner with several open-line manufacturers following a local dealership’s charity event. Each of the manufacturers was in town supporting a local rep group, and a great time was shared by all (our industry is really good at this). During our dinner discussion, the topic of “mega-dealerships” came up amongst the group. As one of the manufacturers stated, “Didn’t XYZ dealer just buy another dealer?” The answer was “Yes,” but the follow-up question and subsequent conversation absolutely floored me…
“Does anyone know if they plan to buy other dealers?” is the question that followed. Being reasonably aware of this dealership’s expansion goals, I couldn’t believe the conversation that unfolded. Not one of the manufacturer leaders was aware of the narrative surrounding our industry’s distribution consolidation trend and the immediate actions being taken by progressive dealerships to expand their services and geographic footprint.
For those that are not aware of this incredibly important and disruptive narrative, several large dealerships are expanding — and they are making no small plans as they do it. As we will publish in Greyspace’s upcoming “Understanding the Expanding Dealer” survey, we predict as much as 40-50% of our industry’s revenue will be driven through as few as twenty expanding dealerships by 2030. READ THAT AGAIN.
Expanding dealerships will become one of the most disruptive change agents to our industry’s manufacturer and rep stakeholders for the next several years.
As the tidal wave of dealerships advances their expansion plans, there will be plenty of insights and opportunities that will enable industry manufacturers and their representatives to capitalize; while on the flip side, it will create significant challenges to those that are not adapting their processes, strategies, and capabilities to support this sprawl.
An expanding dealer recently told us:
"One of our challenges is how to cohesively strategize our growth plans with independent entities such as open-line manufacturer partners and their reps."
While each expanding dealership will execute on their bespoke market strategy, they are looking for partners to help them execute their unique customer experience, buying programs, and services. As more acquisitions take place, the dealer has a monumental task of bringing this new location, their team, and their customers into a cohesive strategy. A reminder, the goal of an acquisition for the dealer is to make 1+1=3, not to create a worse experience for the local team and their clients. This seems like an opportunity...
Conclusion
As Sun Tzu says in The Art of War, “In the midst of chaos, there is opportunity.” While the Wild West of expansion and consolidation will inevitably continue over the next few years, those that get ahead of these trends and elevate their role in the client buying journey will likely have the opportunity to significantly grow their brand and their relevance as consolidation ensues. Dealerships are looking for help from open-line brands to support their growth goals, and those that deliver a solution will have a tremendous head start against their competition.
