Brick-and-Mortar Stays Viable

Despite the digital transformation in the auto industry, traditional car dealerships demonstrate remarkable resilience and profitability. This perspective comes from examining the financial performance and operational scale of brick-and-mortar dealerships.

Key Points:

• Dealership Performance Metrics:

  • Average dealership generates $36 million in sales (first 6 months of 2021)
  • Profit margins range from 10-15% of total sales
  • Single location can generate up to $210 million annually
    • $20 million monthly during peak months
    • $15 million monthly during slower months

• Sales Volume:

  • Example from Mercedes Benz Music City dealership:
    • Sold 200 cars in June
    • Represents approximately $20 million in car sales in one month

• Market Stability:

  • Monthly car sales remain relatively steady throughout the year
    • High months: 1.6 million units
    • Low months: 1.2 million units
    • Not significant seasonal variation

• Digital Integration:

  • Traditional dealers are adapting to digital transformation
  • Companies like Modal helping dealers compete with online-only platforms
  • Digital tools can increase sales by 30-35%
  • Streamlines purchasing process and reduces transaction time

This demonstrates that while digital transformation is important, traditional dealership models maintain strong financial performance and continue to play a crucial role in the automotive industry.