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What does Dealers United do?
How does it work?
Why do you need it?
Frequently Asked Dealers United Questions
What is Dealers United?
ANSWER: Dealers United is a network of dealerships that have come together to create a collective buying power that allows them to compete with the larger public dealerships.
How does it work?
ANSWER: Private Dealerships join the network and get access to deals offered by our qualified vendor network. Each deal presented to the dealers is guaranteed to offer savings.
How do you guarantee savings?
ANSWER: The ability to negotiate better terms and pricing with vendors depends heavily on the volume you purchase. A large public dealership can negotiate better pricing with vendors due to the volume they buy. Dealers United achieves the same results by bringing together a large network of private dealers.
Which vendors are part of your network?
ANSWER: Every time a dealer joins our network we ask them for a list of their preferred vendors. We then match with our vendor network, and if we see multiple dealers working with a vendor we then consider adding them to our network. Our goal is to build a quality network of vendors our dealers recommend.
Why we founded Dealers United
In 1990, there were just over 900 dealership under large* dealer group control. Today, there are around 1,400 dealerships or a 50% increase in only 20 years! Comparing these numbers to the auto industry, there was about a 35% contraction in total dealerships over the same time period!
What does this mean?
Essentially the bigger dealer groups are getting bigger while the smaller and independent dealerships are continuously getting smaller in terms of overall market share.
Why does this matter?
As large dealer groups’ market share increases, they also gain competitive advantages allowing them to run more efficiently than other dealerships. They are able to run more efficiently because they use their power in numbers to realize additional savings. In turn, they are able to take these savings and reinvest them into additional training, upgrading building and facilities, additional advertising, and much more.
Will big dealer groups’ market share continue to increase overtime? We believe their market share will continue to grow at a very rapid pace due to a number of factors. Let’s looks at history first. The first public dealership group went public in 1996 with 0.4% market share. In 2009, their market share soared to 7.3% which is a 1700% increase in only 13 years!
How are they able to grow so fast?
They have CASH! Right now, many dealers have been reading about how big groups are in acquisition mode. This is because they have all the cash to do it even after the great recession we went through the past few years. Additionally, since banks are not back to “normal” lending levels, they are requiring much more capital to buy dealerships which makes it a perfect buying time for big groups to gain market share.
What happens if big dealer groups’ market share continues to increase and they become even more efficient as they grow? The question should not be “if” but rather when. Independent dealerships and small dealer groups are essentially frogs in warm water. Currently, the market share that public groups have is not a major threat to the industry. However, years down the road it absolutely will be and it will be too late to recover from if nothing is done to level the playing field.
What does this mean for our industry?
Wal-Mart. Yes, Wal-Mart. Think about Wal-Mart because this is where our industry is headed whether you want to believe it or not. It is almost next to impossible to compete any longer in the general merchandising industry unless you are a big company like Wal-Mart or Target. Private groups or family owned general merchandising stores cannot compete with these big companies any longer due to major differences in the cost of doing business between big groups like Wal-Mart and smaller family owned businesses. In our own opinion and through our research, the auto industry is slowly beginning to mirror what happened to the general merchandising industry over time.
It is not happening over night, but it is happening and the facts prove that market share gains of big public groups are on the rise and will continue that way.
What can dealers do to keep their cost of business down and stay competitive in this industry?
There is not an exact silver bullet to remedy this situation, but Dealers United was founded on the premise of educating dealers first on this situation. Secondly, Dealers United came up with a plan to help dealers fight this cause and ensure that there will always be an opportunity for family owned and operated stores to compete with big dealer groups.
Dealers United has created a system to help dealers significantly reduce their vendor expenses by combining the purchasing power amongst many dealerships across the country and giving the savings back to the dealer. This will allow our dealers to invest these savings back into their businesses to help them run more efficiently at no cost to the dealer. Expect to see vendor savings between 20-75% off!
To learn more about the cause, please join us today! We are eager to work with you and make your dealership not only more efficient but also add more to the bottom line!
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