I just returned from Shanghai where I attended the Auto China, the country’s main international auto show, which alternates between Shanghai and Beijing. I was really struck by how indistinguishable domestic brands are now from foreign brands, in both design and technology. Those used to be barriers to entering the U.S. market. They are no more. The main barrier now, methinks, is the difficulty of building a new brand in an already crowded market.
In a small world moment, while in the Ford stand I ran into NADA president Peter Welch and a handful of U.S. dealers. They had visited some Chinese dealership groups to pitch the merits of the franchised dealer system if those Chinese groups considered moving into the U.S. market. I hope to hear more tales from their trip.
The U.S. market may start to look good to Chinese automakers as sales growth in China begins to slow. It appears, however, that the same is occurring here. Forecasts for April generally show new vehicle sales slowing by around three percent compared to the same month in 2016. At the same time, incentives are rising, as are the amount of time cars sit on dealership lots.
The impact of those trends on the buy sell market can be hard to predict. One thing is for sure, however, deals will continue to get done. But, there are some deals that you might want to consider giving a pass. In this issue, Joe Aboyoun goes over some issues that can turn a deal into one you should avoid.
Also in this issue, Loyd Rawls dissects the strategy of the dealership consolidators – many of the publicly-owned groups, that is – and suggests that privately-held groups, rather than being discouraged, can come up with a strategy of their own to beat the consolidators at the game.
And there is, as always, Transaction News.