Downsizing Auto Dealers Trying to Get Ahead of Market Trends


Auto Dealers own or lease around $130 billion worth of real estate in this country. On top of that, the land they own is pricey since they pick spots with high visibility on high-traffic roads. To house a lot of inventory on these pieces of property is quite the investment. This has been the tradition for decades, but some dealers are selling off their property to shrink their inventory and focus on other areas of the sale.

A good example of this is what’s going on with AutoNation. They are selling a portion of their $3 million property assets to raise $500 million to invest in a line of stand-alone used car stores called “AutoNation USA” — this is a part of a brand investment over land investment.

Car sellers are reacting to the buying behaviors that are rapidly changing since shoppers are spending more time searching for deals, instead of spending it on the physical lots. Most car buyers are armed with internet research before they ever hit the lot, and this makes them aware of both which vehicles they want, and pricing before they ever walk into a showroom — so what’s the point of having rows and rows of varied optioned models?
It seems like they are following the Tesla model, maybe a little loosely, but it’s also worth pointing out how hard most dealerships fought to keep Tesla showrooms out of their towns because they didn’t have a physical inventory lot…just saying.


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