In the United States, owning a car is not a luxury; it is a necessity. Today, almost 95% of American households own a vehicle, translating to over 286 million vehicles.
On average, 38,000 new vehicles are bought in America each day. For this reason, the auto industry is among the best to invest in right now. This article explores the top six car dealer specialty franchises in the United States that give you the best shot at profitability and success.
Review of the Car Dealership Industry
In 2020, what was on course to be the worst year for the auto industry in the US since the great recession ended up with a surprising comeback. The sector showcased impressive levels of resiliency, indicating that it offers evergreen opportunities. In that period, the nation’s franchised light car dealerships sold a whopping 14.5 million light-duty vehicles totaling over $980 billion.
The used car market in the US is more than twice the new car sector and is proliferating. It’s estimated that Americans buy 39.4 million used cars each year, versus 17.3 million new ones. It also predicts that used vehicle sales will outpace new vehicle sales in the foreseeable future.
In 2021, the new dealer’s car industry is estimated to reach $989 billion and is forecasted to register a growth of 4.9%. On the other hand, the used car dealer industry is expected to register a growth of 7.7%.
Research Your Target Market
Before diving into the car dealership business, it is crucial to understand that even though the motor industry is rapidly growing, it does not necessarily guarantee the success of your business. Therefore, it is advisable to perform a market analysis of your target market segment to identify key indicators of their interests and financial capability.
For instance, before opening a car dealership, identify what types of cars are popular in the area. If you intend to sell to a broader market, market research should be the basis of your operations.
To ensure your business's long-term survival, you should also constantly keep track of your customer's interests.
Top Six Car Dealership Franchises
If you are convinced that a car dealer specialty franchise is a fit for you, here are the top six car dealership franchises in the US.
1. Dominion Auto Centers
Franchise Fee: $35,000
Initial Investment: $50,000
Dominion Auto Centers is a Canadian chain of auto dealerships and repair shops. Founded in 2012, it is Canada's first complete auto center concept. It covers car and truck sales as well as finance, automotive service and repair, towing accessories, and more. Today, the Dominion Auto Centers franchise is available across the United States.
Before opening their doors, franchisees must have some basic knowledge in either auto sales or repair. To ensure success, they will also undergo a training program that equips them with the necessary business skills. Franchisees can also access the franchisor’s online training, operating procedure archives, and social media marketing strategies.
2. Thrifty Car Sales
Franchise Fee: $35,000
Initial Investment: $765,000 - $4,000,000
Thrifty Car Sales is a motor dealership concept offering late model and low mileage cars. It is a subsidiary of Dollar Thrifty Automotive Group, Inc., which is based in Tulsa, Oklahoma. Before the vehicles are offered for sale, they first undergo a rigorous inspection process and are eligible for a limited warranty.
Their experienced staff is committed to providing an extensive array of support services such as training, operational support, marketing, and advertising. Franchisees also benefit from a top-notch website solution that is designed to drive traffic to their businesses.
3. J.D. Byrider
Franchise Fee: $50,000
Initial Investment: $675,480 – $5,277,500
J.D. Byrider is another potential car dealership franchise option. Unlike the others in this list, Byrider not only offers vehicle sales but also financing to customers.
The Byrider franchising model eliminates the franchisee's reliance on a lender to make a sale. Instead, the franchisee plays both roles as the financier and the retailer, giving an unprecedented amount of control over each sale. Their remarkable business model has stood the test of time and yields a high return on investment.
The franchisees benefit from an array of in-person, onsite, and online training before the opening day and throughout the franchising period. Also, their proprietary software integrates all information gathered from different sources such as credit bureaus and banks to ensure that the franchisee has all the necessary information for their operations.
4. Car-X Auto Service
Franchise Fee: $25,000
Initial Investment: $262,000 - $413,500
Car-X began as an exhaust specialist in 1971. Today, the company has experienced tremendous growth and is now one of the leading automotive retailers in the United States, providing all-around auto services.
With over 160 open locations countrywide, the company has a reputation for providing exceptional service. They have built their success on three main pillars: fast service, reliability, and affordability.
By partnering with Car-X, franchisees benefit from access to over four decades of experience, powerful brand recognition, continuous training and support, and low royalty and start-up fees. Also, franchisees get access to proven marketing and advertising strategies.
5. Sonic Automotive
Sonic Automotive was incorporated in 1997 and is one of the largest automotive retailers in the United States. Since its incorporation, the company has proven to be recession-resistant and remain profitable during the 2008 global financial crisis. Today, it has 98 franchised locations consisting of dealerships and collision centers across the United States.
In 2014, Sonic Automotive launched EchoPark, a branch that features 1-4-year-old pre-owned vehicles. Although this addition came late, it has made big moves in the auto industry and is expected to open 25 locations across the US by 2025.
6. Hendrick Automotive Group
Hendrick Automotive Group is the largest privately owned automotive retailer in the United States. It was founded in 1976 as a Chevrolet dealer.
Through the years, the company experienced tremendous growth and now employs a workforce of over 10,000 people across 13 states. In 2020, they sold more than 219,000 vehicles, generating revenue of approximately $10 billion.
Hendrick Automotive Group's business plan offers franchisees a strong potential for profitability and growth. Also, their employee support program, named Hendrick Cares, assures potential franchisees of continuous support throughout the franchise period.
Final Thoughts
Finding a perfect franchise opportunity that meets your requirements can be challenging, considering how many different franchise opportunities are out there. One key step towards your success in franchising is finding the perfect franchisor both for yourself and for your target market segment.
To that end, Franchise123 is committed to helping you find your ideal car dealer specialties franchise opportunity and helping you begin. Jumpstart your journey today!
