There is no doubt that car dealerships are engines of economic activity. In fact, in many small towns across this country; the local car dealership might be one of the largest, if not the largest employer. When examining the economic impact the car dealership has on the local community, focusing solely on the vehicle aspect, is ignoring a large piece of economic activity transpiring at the dealership. Sure there are cars being sold and vehicles being serviced, but what about all of the OTHER business that takes place at car dealerships? In fact, today’s modern dealership is very similar to the mercantile exchanges of yesteryear.
Car dealerships are constantly packed with numerous vendors selling diverse products and services.
Food Vendors
My favorite vendors are the food vendors. Car dealerships are frequently visited by: caterers, food trucks, restaurants, and other vendors selling assorted small food items. Many of the larger dealerships have built in concession stands that are either part of the dealerships P&L structure or are licensed out to 3rd party vendors. However food is delivered to the dealership, there is no shortage of companies trying to attract the dealership market. The reason is simple; car people work long hours and are unable to leave the dealership. It is very difficult for us to leave a deal or a customer in search of food, so it is essential that food comes to us.
The people who “go between” dealerships
Many people earn their living, not at the dealership, but between dealerships. These include:
• Title runners
• Drivers
• Truckers
• Parts couriers
• And my favorite type of vendor in the used car industry… wholesalers
Vendors selling to the Used Car Manager and General Manager (sell side) include:
• Companies wanting to sell leads
• Companies that want to sell balloons and other front lot decorations
• Companies that want to sell advertising
• Companies that want to sell their transportation services
• Companies that want to sell their subprime lending packages
• Companies selling training packages, etc…
Even though the list of vendors selling to the Sales and F&I departments is large, the list of vendors selling to the Parts, Service, and Body Shop departments is even longer. The important part to remember isn’t that car dealerships are constantly being barraged by vendors selling everything from burritos to silk neck ties, but that the economic impact of the local dealership is difficult to calculate. There has been a lot of media attention recently about the resurgence of the American car dealership as well as the domestic manufacturers. However, most stories often neglect all non-car economic activity in their analysis. This incomplete analysis causes the importance of the local car dealership to be underestimated. In conclusion, it doesn’t seem to matter if the automotive retail industry is doing great or the entire country is in recession, car dealerships still get only part of the economic impact credit they rightfully deserve.