Decreased consumer spending during the recession caused steep demand decline
New York, NY (PRWEB) August 12, 2014
The Online Car Dealers industry retails automobiles to consumers and businesses and provides related services, including auto loan financing and vehicle trade-in and car-selling services. Included in this industry are online-only dealers and brick-and-mortar dealers that offer online purchasing. According to IBISWorld Industry Analyst Darryle Ulama, “the industry experienced its share of wear and tear in the aftermath of the Great Recession, when low consumer confidence led to steep declines in car sales.” The result was a drop in industry revenue in 2009. Improving economic conditions and government incentive programs, however, resulted in overall positive growth thereafter, with industry revenue expected to increase in the five years to 2014.
The industry has exhibited high revenue volatility in the past five years. For example, revenue surged in 2010 because of a release in pent-up demand. However, in 2011, revenue contracted as the effects of government incentive programs, such as Cash for Clunkers, expired. “Revenue volatility is expected to ease going forward as operators benefit from steady growth in consumer confidence and disposable income,” says Ulama. Along with overall revenue growth, average industry profit margins rose in 2014, due to cost-cutting measures such as employee layoffs. In addition, growing demand for compact cars, hybrids and other fuel-efficient vehicles has allowed for greater pricing flexibility, which has widened margins. Strong vehicle sales in the early half of 2014 will help the industry achieve an expected increase in revenue over the year.
Growth is expected to temper in the five years to 2019. Despite stronger demand from consumers and businesses endowed with higher disposable income and profit, the industry will continue to face challenges in luring consumers to buy online. In addition, the industry faces threats from potential future legislation that would give states the ability to collect sales tax from out-of-state online retailers. These and other similar measures would increase costs for online car dealers, thus lowering profitability. Nevertheless, IBISWorld forecasts the industry will grow in the five years to 2019.
For more information, visit IBISWorld’s Online Car Dealers in the US industry report page.
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IBISWorld industry Report Key Topics
The Online Car Dealers industry retails automobiles online to consumers and businesses and provides services to aid in the purchase of automobiles. Autos include passenger cars, trucks and sports utility vehicles (SUVs). Some players offer their customers trade-in, car financing and car selling services. This industry does not include classified websites that feature reviews, guides, photos and advertisements of new and used vehicles for sale.
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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