Published January 6, 2026
U.S. Auto Retail M&A: Franchise Buyers, CarMax, and the Limits to Scale
inpractise.com/articles/franchise-dealer-groups-vs-carmax-manda-reality-and-the-limits-of-scale-in-us-auto-market
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They don't keep it open because it could become overly competitive?
Exactly. Each manufacturer has a protected territory radius, and they won't place another dealership within that radius. This differs from used car dealerships. If I have Joe's Auto Sales, I might see Allen's Auto Sales across the street. But with a Ford dealership, there won't be another Ford dealership within a five-mile radius in most states. This is all dependent on brand and state. Each brand has its own rules, and each state has its own laws. It's quite complex.
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Why is that the case?
Because there's standard pricing for parts and new vehicles, and all dealers in the network pay the same price, no matter where you are in the country or how many you're buying. So there's no economies of scale when it comes to purchasing new vehicles or more parts. So, really, your consolidation is about trying to consolidate your SG&A expenses and personnel. You're streamlining that more than anything because you can't change the price of parts or cars.
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