The industry has posted overall gains since 2007, despite turbulent recessionary sales
New York, NY (PRWEB) April 10, 2014
The New Car Dealers industry stalled momentarily during the recession; however, bolstered by improving economic conditions, such as rising consumer confidence and disposable income, industry revenue is expected to trend higher over the five years to 2014. During the peak of the recession, rising unemployment and falling disposable income made consumers reluctant to make discretionary purchases, particularly large ones such as new vehicles. Moreover, higher fuel prices further hindered industry demand. Nevertheless, these trends reversed during the latter part of the five-year period as confidence revived.
As the economy began to recover in 2010, so did demand for automobiles. According to IBISWorld Industry Analyst Brandon Ruiz, “Industry revenue is expected to increase at an average annual rate of 2.3% to $9.9 billion over the five years to 2014, including estimated growth of 0.9% in 2014.” Similarly, profit is also forecast to expand during the five-year period, bolstered by rising technological change driving down labour costs. For example, industry operators are increasingly utilizing the internet to perform tasks that are typically done by car salesmen, such as providing consumers with vehicle quotes. Although technological change will lift profit higher, the emergence of online automobile services also slightly hinders profit margins, as potential customers are able to compare prices among several dealerships. As a result, price negotiations become more difficult, inhibiting profit growth prospects.
Over the five years to 2019, the New Car Dealers industry is expected to continue to accelerate. “New vehicle models, particularly fuel-efficient vehicles and rising consumer confidence, are anticipated to support industry demand,” says Ruiz. Additionally, improving economic conditions will boost employment and disposable income levels, which will enable consumers to purchase big-ticket items, such as a new vehicle. Moreover, in the face of rising fuel prices, demand for fuel-efficient vehicles will also drive industry revenue growth. Although these factors will push industry revenue higher, industry operators are expected to face challenges as well, particularly from rising interest rates. As interest rates increase, financing becomes more costly, which will inhibit revenue growth prospects. Nevertheless, industry revenue is forecast to over the five-year period.
For more information, visit IBISWorld’s New Car Dealers in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry sells new and used passenger vehicles. Vehicles include passenger cars, light-duty 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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