Tynan talks manufacturers and franchise system

June 18, 2024

Bloomberg Intelligence's Kevin Tynan made his regular appearance at the VADA Annual Convention this month, offering his analysis of the challenges facing manufacturers and opportunities in front of franchised dealers, which continue to sit in the best position to drive automotive retail sales.

Kevin's full audio and slideshow is available here. In summary, according to Tynan:

Automakers will have to lean more on retailers’ sales, distribution, and aftersales experience to dig out from an inventory pile-up underpinned by the highest prices in history and electrified vehicles that have attracted only a small sliver of buyers. Sales have stalled after the manufacturers’ orchestrated mix shift to higher-margin vehicles in recent years generated $13 billion in new pretax profit for publicly traded dealer groups. AutoNation, Lithia and Penske split $10 billion of that total, and they’re likely best positioned to benefit from the heightened dependence on the franchise base.

  • Dealers Are the Fix for Oversupply: Dealership are equipped to facilitate sales, distribution and aftersales transactions as automakers are challenged by more urgent margin and growth concerns.
  • Retail Channel for Foreign and EV Brands: Instant retail distribution scale for small, nascent automakers – or existing foreign brands with no US presence — is only accessible through the already established franchised dealer network.
  • Parts and Service Are the Profit Cornerstones: As margins contract, dealers will focus on the fixed operations of auto-part sales and service-bay revenue – the highest gross-profit-contributing segment.


Listen to Tynan's remarks and follow along with the slideshow.