Driving Profitability -A cross-sectional study of the profitability performance in the Swedish car sales industry

Abstract

Earlier research within the automotive industry has primarily focused on the car manufacturers, and very little on the companies with the closest connection to the consumers - the retailers. The purpose of this study is to describe the profitability performance of Swedish car dealers by adopting ideas from the field of retail research, economic theory and intra-industry discussions. Using a cross-sectional design and a quantitative research method, we developed our own unique database containing financial information and sales statistics from 215 Swedish car dealers. By analyzing the statistical measures of profitability performance and its relation to economies of scale, product assortment, corporate and used car sales, cost controls and customer loyalty, we were able to provide a better understanding of what characterizes a profitable car dealer. We could also conclude that the conduct of the used car sales, the brand strategy and loyal customers played an important role for the studied firms.