As the industry climbs out of the recession, manufacturers are more demanding about dealers sprucing up stores. Roger Penske, who runs the nation’s second-largest auto retail group, says growing tension between dealers and automakers could cause some dealers to sell out.
During Penske Automotive Group’s recent earnings conference call, Penske told analysts he will be “opportunistic” in acquisitions as dealers struggle with tough requirements to overhaul their properties. He predicts plenty of dealers will sell out rather than pay for costly construction projects.
Many dealers say financing remains tight and they can’t obtain loans on the terms they want. Others are leery of taking on debt in a still-fragile economy.
“There’s tremendous pressure on dealers today for capital expenditures,” Penske said. “They’ll decide whether they stay or get out when they see the kind of check they have to write for that.”