Question-and-Answer Session
Operator
Thank you. (Operator Instructions) Your first question comes from David Scharf – [JPM Securities].
David Scharf – JPM Securities
First question is more macro in nature. As you look at the next few years not just 2009, Mark is your guess that the 10 to 15% contraction in dealerships that you’re forecasting for this year is going to be more of a multi-year phenomenon? I mean just as try to gauge ultimately what the end market looks like here, what’s your best guess for the number of rooftops going out three years?
Mark O'Neil
Well, let me call it three to five years. I think we’re somewhere between 15 and 17 thousand dealers. And if you go out in the three to five year timeframe, you’re going to probably see a few net adds to offset what will be substantially the domestic contraction. So look GM has announced that they expect over a five year period to shut about 1,700 dealers.
And I think if you look at the efforts underway by Ford and Chrysler their numbers aren’t quite as large, but let’s assume for a moment they’re proportional to their market share to GM. That might be a total there of almost 4,000 dealers, slightly less than that. Starting with a base of 20 that puts you at 16.
We do know that a number of Chinese companies have expressed interest in the U.S. market over the long term. That will probably add to the count. We know a couple of the Korean manufacturers continue to expand their dealer count. And we do think a number of Indian manufacturers and particularly Mahindra and Mahindra has already announced that they expect to expand a dealership base here. So if you get down to 16, maybe you add 500 more or maybe they’re 500 less. That puts you somewhere in that range of 15 to 17 and I think the market probably stabilizes long-term there.
From our perspective, that’s not a bad thing. I think it’s a much healthier dealership base. I think the same number of transactions are spread through a smaller base. And that really helps driver dealership profitability from our perspective than you might say, ?Well, jeez, if it doesn’t impact transactions, what about subscriptions?? The good news is we’re starting from a very small base and so whether we’re selling into 20 thousand dealers or we’re selling into 16 thousand dealers, I don’t think our opportunity substantially changes in the next three to five years.
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