Are The U.S. Chamber of Commerce reports that small businesses account for 99.9% of all U.S. businesses and employ 46% of the private sector workforce. According to the SBA’s “small business” definition, the majority of local franchised auto dealerships are part of the 33.2 million small businesses that form the foundation of our nation’s economy. At the heart of many communities are “main street” businesses. They are often locally owned brick-and-mortar stores that offer essential goods and services. These “main street” businesses serve as a hub for social interaction while fostering a sense of place and hometown pride. Franchised auto dealerships are the last true “main street” businesses. With deep community ties, many of these businesses are family-owned and have been passed down from generation to generation. When it comes to local franchised auto dealerships, an estimated 85% of the 16,000+ are family-owned and some even have a fourth generation getting ready to take over the reins. These dealerships are known for their accessibility, a place where customers can often interact personally with the owner, thus fostering strong community relationships. Additionally, dealers are inherently ingrained and deeply invested in their communities, giving back as much, if not more, than they bring in. Across the board, dealers directly invest in their neighborhoods through car donations, Little League sponsorships, volunteer hours and so much more. And this is just the start of what dealerships bring to the local table. Employees of dealerships are often involved in chambers of commerce and other local business associations, playing a direct role in keeping the local business community vibrant and healthy. This level of community commitment is not easily replicated. It’s not hard to see how franchised dealerships have become an integral piece of the local economy and we haven’t even mentioned economic activity. According to NADA, in 2024, Virginia dealerships employed 61,245 people, that’s 65 employees per dealership on average with a whopping $2.4 billion in payroll. What’s more, those employed in the automotive industry don’t have just another low-paying job. Whether it be in retail or as a service technician, the automotive industry offers one of the few work opportunities where those who don’t see a four-year college degree as an option, can find a path to the middle class and higher. All that is needed is a healthy dose of work ethic, a willingness to learn and on-the-job experience. The benefits of these jobs to the community are immediate because employees and customers are the community. The profits feed right back into the local area. Really, the only people the franchise model isn’t good for are Wall Street billionaires. Yet another staggering number is the $1.2 trillion in total sales that Virginia’s franchised auto dealers made in 2024. That equates to more than $24 billion in state and federal income taxes and $112.3 billion in state sales tax. Those are impressive numbers, and though there are certainly outliers, most franchised dealerships, fit into the “main street” business mold. They are not what one would classify as a mom-and-pop shop nor are they considered a billionaire class. Simply put, they are affluent “main street” community businesses. While not immune to consolidation by larger corporations, for the most part, dealerships remain a fundamentally local small business that lives and dies by their community, selling person to person to their neighbors. The recent efforts of new tech manufacturers to disrupt the franchised dealership system — which has thrived for over 100 years — have not succeeded. What leaders from new tech companies fail to realize is how expensive it is to get a storefront, customize and brand it, fill it with inventory, hire staff and train them on the intricacies of the car make and model so the customer relationship can be built, nurtured and live well beyond the initial purchase of the vehicle. This carefully developed relationship happens over time and includes regular oil changes, service and repair, warranty work, and if all goes to plan, selling the customer their next new car when the time is right. Over the last decade, we’ve heard a lot of talking points about the usefulness of physical dealership stores. The talking heads spoke from one extreme to another, especially with Tesla and The Role of Franchised Auto Dealerships in Local Economies Dead? “Main Street” Businesses 14 Virginia Auto Dealer
RkJQdWJsaXNoZXIy MTg3NDExNQ==