Higher consumer confidence and disposable incomes will drive demand for cars.
Los Angeles, CA (PRWEB) October 21, 2013
Following years of volatile revenue, the New Car Dealers industry is set to contract. The industry is vulnerable to economic shifts due to its dependence on employment rates, overall consumer spending, financing rates and home values. In 2011, the tsunami and earthquake in Japan hurt the New Car Dealers industry by reducing dealers' supply of vehicles and vehicle parts made in Japan. Limited supply coupled with growing demand inhibited growth, until supply levels returned to normal in 2012.
In the five years to 2013, industry revenue is expected to decrease at an annualized rate of 1.9% to $565.1 billion. Revenue dropped in 2008 and 2009, when the recession lowered employment and consumer confidence levels. This situation resulted in sharply lower vehicle sales, despite a federal trade-in rebate program that drove more than 700,000 new vehicle sales. In 2009, General Motors (GM) and Chrysler filed for Chapter 11 bankruptcy; this move contributed to a 4.4% decline in the number of establishments in 2010, including the closure of more than 2,000 of GM's 6,000 dealership locations in the United States. But in 2010, industry revenue and profit turned the corner as the economy began to recover and disposable incomes rose. According to IBISWorld Industry Analyst Brandon Ruiz, “With increased discretionary spending and elevated confidence, consumers will once again pursue big-ticket items, including new vehicles.” Consequently, revenue is expected to jump 0.6% in 2013. New fuel-efficient vehicles and greater access to credit will further support growth. Still, residential housing price depreciation and financing difficulties in some states will pose a threat to the industry.
“In the five years to 2018, IBISWorld expects industry revenue to grow, due to higher consumer confidence and disposable income, which will drive increased demand for cars and trucks,” says Ruiz. Furthermore, industry players are anticipated to expand their higher-margin parts and repair service segments. The introduction of new energy-efficient vehicle models will boost sales as consumers move away from gas-guzzling vehicles. These new models will face stricter government regulations regarding emission and fuel standards, which will raise selling prices.
For more information, visit IBISWorld’s New Car Dealers in the US industry report page.
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IBISWorld industry Report Key Topics
The New Car Dealers industry sells new and used passenger vehicles. Vehicles include passenger cars, light trucks, sport utility vehicles (SUVs) and passenger vans. New car dealers also sell parts and provide repair services.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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