Business
Eli Lilly’s obesity pill remains a viable rival to Novo’s oral Wegovy despite data that underwhelmed investors
A sign with the company logo sits outside of the headquarters of Eli Lilly in Indianapolis, Indiana, on March 17, 2024.
Scott Olson | Getty Images
Eli Lilly‘s stock is still recovering after the drugmaker released trial data earlier this month on its closely watched obesity pill that underwhelmed Wall Street.
In a key late-stage trial, Eli Lilly’s pill, orforglipron, caused less weight loss and had higher side effects than what analysts were expecting. The pill’s efficacy also appeared to come in slightly below that of Novo Nordisk‘s oral semaglutide for obesity, which showed strong data in a separate study.
Shares of Eli Lilly fell about 13% on the day the trial results were released, although they’re up about 12% since then.
But some analysts say Eli Lilly’s daily pill, if approved, could still be a viable competitor in the weight loss drug space — even if it will likely be second to enter the market. It’s a highly lucrative area that is eager for more convenient options that could ease the supply shortfalls and access hurdles created by the pricey weekly injections currently dominating it.
Analysts note that Eli Lilly’s pill could have a few advantages over the daily oral version of Novo Nordisk’s weight loss drug semaglutide, which is on track to become the first needle-free alternative for obesity to win approval in the U.S. later this year. Eli Lilly hopes to launch its pill globally “this time next year,” CEO David Ricks told CNBC in early August.
Both drugs work by mimicking a gut hormone called GLP-1 to suppress appetite and regulate blood sugar. But while Novo Nordisk’s pill is a peptide medication, orforglipron is a small-molecule drug.
That means Eli Lilly’s pill is absorbed more easily in the body and doesn’t require dietary restrictions like Novo Nordisk’s does. Orforglipron will also be easier to manufacture at scale, which is crucial as demand for obesity and diabetes injections outpaces supply.
Neither company has released prices for its respective pill, but some analysts said Eli Lilly’s drug could potentially have a lower price than Novo Nordisk’s pill. That would be a notable edge, as many health plans in the U.S. still don’t cover obesity treatments.
“It’s a little bit of an apples and oranges comparison because Novo Nordisk could have difficulty manufacturing enough of the product, given the high cost and requirements to manufacture oral semaglutide,” Leerink Partners analyst David Risinger said in an interview.
“Whereas Lilly plans to blanket the world with orforglipron, and very quickly it will generate dramatically more sales,” he continued. “It can launch globally in an extraordinary manner with lower prices and with no food intake consideration.”
Goldman Sachs analysts seem to agree, based on a note in August. They forecast daily oral pills will capture 24% share — or around $22 billion — of the 2030 global weight loss drug market, which they expect to be worth $95 billion.
The Goldman analysts said they expect Eli Lilly’s pill to have a 60% share — or roughly $13.6 billion — of the daily oral segment of the market in 2030. They expect Novo Nordisk’s oral semaglutide to have a 21% share — or around $4 billion — of that segment. The remaining 19% slice will go to other emerging pills, the analysts said.
The race to develop a more convenient obesity pill has been fraught, as companies such as Pfizer have had to scrap previous contenders and bring forward new ones. Novo Nordisk and Eli Lilly are also exploring other experimental oral drugs, along with a slate of other companies such as Viking Therapeutics, Structure Therapeutics, AstraZeneca and Roche.
In a statement, Novo Nordisk CEO Mike Doustar said “we strongly believe in the efficacy” of the oral drug. The Danish company added it will be “laser-focused on getting this product to patients without supply constraints” in the U.S.
Dr. Mihail “Misha” Zilbermint, director of endocrine hospitalists at Johns Hopkins Community Physicians, said it’s hard to crown a winner between Eli Lilly and Novo Nordisk without knowing how their respective pills will be priced and whether insurance will cover them.
“I think both of the drugs are going to be gamechangers,” he said. “When it comes to which company is going to win the game — cost is the biggest issue.”
Weight loss, side effect comparisons
It’s difficult to directly compare the results of separate clinical trials, especially as investors wait for Eli Lilly and Novo Nordisk to release the full data from their phase three studies.
Eli Lilly’s ATTAIN-1 trial also followed 3,000 patients, while Novo Nordisk’s OASIS 4 study evaluated a much smaller group of roughly 300. There are currently no studies directly comparing the two drugs, a Novo Nordisk spokesperson said.
But Novo Nordisk’s oral semaglutide appears to cause a greater level of weight loss than Eli Lilly’s pill based on the available data, said BMO Capital Markets analyst Evan Seigerman.
In the trial, the highest dose of Eli Lilly’s pill helped patients lose 12.4% of their body weight on average at 72 weeks. The pill’s weight loss was 11.2% when analyzing all patients regardless of discontinuations.
Wall Street had hoped Eli Lilly’s pill would generate weight loss of around 15%, the same level as Novo Nordisk’s blockbuster weight loss injection Wegovy. Semaglutide is the active ingredient in Wegovy and its diabetes counterpart Ozempic.
Novo Nordisk flags flutter outside its office in Bagsvaerd, on the outskirts of Copenhagen, Denmark, on July 14, 2025.
Tom Little | Reuters
Meanwhile, the 25-milligram dose of Novo Nordisk’s oral semaglutide helped patients lose up to 16.6% of their weight on average at 64 weeks, according to results from the trial presented at a medical conference in 2024. That weight loss was 13.6% when the company analyzed all patients regardless of whether they stopped the drug.
A Novo Nordisk spokesperson added that 20% of weight loss was observed in nearly one-third of patients in the trial.
Still, the slightly lower efficacy of Eli Lilly’s pill may not be significant enough to deter patients from taking it.
“For many patients, 12% is a really great number,” said Seigerman. “There’s definitely a market there” for orforglipron.
In a note earlier this month, Bank of America analysts shared a similar sentiment.
“Yes, weight loss fell a bit short, but ask 100 prescribers whether this new data will really make a difference in who they’d put on orforglipron, and our belief is the vast majority would say, ‘not really,'” they wrote, referring to Eli Lilly’s trial data.
Some investors raised concerns about the side effects and discontinuation rates in the trial of Eli Lilly’s pill. But Seigerman said the drug’s tolerability data — how well patients tolerate it — appears to be relatively in line with that of Novo Nordisk’s oral semaglutide.
About 10.3% of patients who took the highest dose of Eli Lilly’s pill — 36 milligrams — discontinued treatment due to side effects, compared with around 2.6% of those who took a placebo.
Those side effects were mainly gastrointestinal, such as nausea and vomiting, and mild to moderate in severity. An estimated 24% of those who took the highest dose of Eli Lilly’s pill reported vomiting, while 33.7% had nausea.
Leerink’s Risinger said he is watching to see how persistent those gastrointestinal issues are once Eli Lilly presents the full data.
The side effects in the trial on Novo Nordisk’s pill were mostly gastrointestinal-related: 30.9% of those who took oral semaglutide reported vomiting and 46.6% reported nausea, according to the trial results.
Johns Hopkins’ Zilbermint said it’s difficult for him to decide which one has a better safety and tolerability profile based on the available data.
Meanwhile, Seigerman pointed to a different factor “that will also matter a lot”: dietary requirements.
Food requirements, manufacturing, price
Unlike Eli Lilly’s pill, patients need to take Novo Nordisk’s oral semaglutide in the morning on an empty stomach with no more than four ounces of plain water. They’re instructed to wait 30 minutes before eating, drinking or taking other oral medicines.
Seigerman said that could be a hurdle for some patients.
For example, “if you’re a parent with kids and you have to take this drug and wait half an hour before you can drink your coffee, you’re going to drive yourself crazy, especially if you have to take this every day,” he said. “I try to think about the real-world use of these drugs in a market like this. It’s going to matter.”
Leerink’s Risinger said oral semaglutide will also be “extremely expensive to manufacture” since it is a peptide medication, and “is likely going to have to be priced higher than orforlipgron.”
A Novo Nordisk spokesperson said the pill will be made mostly in the U.S., and the company is excited about the potential the pill “provides millions of Americans living with obesity.”
“Currently, all typical launch readiness activities [for the pill] are fully underway and building momentum,” the spokesperson said. They added that over the past decade, the company has invested $24 billion in the U.S. to expand manufacturing capacity and fuel research and development. That includes investments aimed at increasing manufacturing of active pharmaceutical ingredients and capacity for the final stages of production for both current and future injectable and oral products.
Small molecules are chemically simpler and easier to produce at scale, making them generally cheaper for companies to formulate. But it is still unclear how Eli Lilly will price orforglipron.
During an earnings call in August, Eli Lilly’s Ricks said the pricing will be based on the value orforglipron brings, considering health-care savings and the comorbidities it can address.
In the note earlier this month, Goldman Sachs analysts said they expect the pill to be “priced at parity” to Eli Lilly’s tirzepatide, the active ingredient in the company’s obesity injection Zepbound and diabetes counterpart Mounjaro, which list for just over $1,000 for a month’s supply.
“They should be cheaper than injections because they are easier to produce. But it does not mean they will be cheaper,” Johns Hopkins’ Zilbermint said. “We just don’t know — for example, we don’t know how much went into research and development.”
Seigerman said commercialization strategies will also be key when the pills compete on the market.
He questioned whether Novo Nordisk will lean into the deal it recently struck with CVS‘s pharmacy benefit manager, Caremark. Under the deal, Caremark started to prioritize Novo Nordisk’s Wegovy on its standard formularies on July 1, making that weekly injection the preferred GLP-1 drug for obesity over Zepbound.
But it is unclear whether oral semaglutide could receive a similar preferential status.
Seigerman also questioned whether Eli Lilly will offer orforglipron through its direct-to-consumer pharmacy, LillyDirect. That offering bypasses insurers and pharmacy benefit managers, allowing patients to directly purchase Zepbound and some of Eli Lilly’s other drugs from the company.
Seigerman said he expects “a lot of nuances in the go-to-market campaign for these drugs,” adding “that’s going to matter.”
Other competitors trail behind
Other obesity pills are in earlier stages of development, making it difficult to directly compare them to the drugs from Eli Lilly and Novo Nordisk without longer and larger trials.
But so far, some experts think they pale in comparison.
For example, Viking Therapeutics on Tuesday released mid-stage trial data that disappointed investors, sending its stock down as much as 40%.
Jared Holz, Mizuho health care equity strategist, said in an email Tuesday that the results on Viking’s drug “look inferior” to those of Eli Lilly’s pill “on almost all metrics.”
Viking’s once-daily pill helped patients lose up to 12.2% of their weight at around three months, with no plateau, which means patients could lose even more in a longer-term study.
Holz pointed to the high rate of patients who discontinued Viking’s drug for any reason over 13 weeks, which was around 28%. Meanwhile, around a quarter of people discontinued Eli Lilly’s pill, orforglipron, for any reason over 72 weeks.
That’s “a much longer trial and therefore [Lilly] looks far better head-to-head,” Holz said.
Business
Explained: On way to 4th largest, how India slipped to 6th rank & what it means for 3rd largest economy dream – The Times of India
In April 2025 when the International Monetary Fund (IMF) released its World Economic Outlook, India was seen overtaking Japan to become the world’s fourth largest economy by the end of 2025-26. One year later, India has slipped to the sixth position on the largest economies rankings, with the United Kingdom reclaiming its spot as the fifth largest economy.In fact, IMF’s latest World Economic Outlook (April 2026) sees India sitting at the sixth spot this financial year too. This projection comes even as India has grown better than expected in FY26 and is seen retaining its tag of being the world’s fastest growing major economy.What has led to the sudden fall? Why has India dropped to the sixth position, falling behind the UK, instead of overtaking Japan to become the fourth largest economy? And what does this setback mean for its dream of becoming the third largest economy by the end of this decade? We decode:
Data drive: India projected as 4th largest, but fell to 6th spot
First let’s look at some IMF data to see which way the Indian economy was headed in April 2025, and what the April 2026 outlook data suggestsAs per April 2025 estimates of IMF, India’s economy would have been at $4601.225 billion at the end of FY 2025-26, overtaking Japan which was estimated at $4373.091 billion. The UK at the 6th spot was projected to have a nominal GDP of $4040.844 billion.However, as per the April 2026 estimates, India’s economy had a nominal GDP of $4,153 billion at the end of FY 2025-26, with the UK overtaking it with $4,265 billion GDP. Japan’s GDP is seen at $4,379 billion.As the above estimates show, India’s GDP estimates have seen a drop over one year, while UK’s nominal GDP has grown better than expected. Japan has been steady.So, what went wrong? Blame the rupee and GDP data itself!
Rupee Depreciation Blow & New GDP Series
The first thing to understand is that IMF’s data on the size of a country’s nominal GDP is in dollar terms. Hence, with global rankings based on dollar‑denominated GDP, they are highly sensitive to exchange rate movements. The biggest party pooper for India’s dream of becoming the fourth largest has been the rupee’s slide. The Indian currency has depreciated more than expected over the last year, dropping from 84.57 versus the US dollar in 2024 to 88.48 in 2025, as per IMF data. The IMF estimates see it at 92.59 this year.Several factors have contributed to the rupee’s decline, including capital outflows, uncertainty related to India-US trade deal up until February, and the recent Middle East conflict which has raised crude oil prices and India’s import bill. Also, the RBI while actively managing volatility in the forex market, is not targeting any particular level of the rupee.Arun Singh, Chief Economist, Dun & Bradstreet India says that India’s recent slip to sixth place in global GDP rankings does not reflect a weakening of the economy, but is largely the result of currency conversion effects and a one‑time statistical revision.The rupee’s depreciation from 2024 to 2026, has mechanically compressed India’s GDP in dollar terms, effectively halving apparent growth despite strong domestic expansion, says Arun Singh.According to Ranen Banerjee, Partner and Leader, Economic Advisory Services, PwC India, GDP in US dollar terms would shave off with rupee depreciation. “We have had almost 7-8% depreciation over the last few months owing to the conflict and portfolio outflows. Thus, in effect in US dollar terms, it is close to shaving out almost a year’s nominal GDP,” he tells TOI.And it’s not just about the Indian economy. The United Kingdom which has overtaken India to bag the 5th spot again also has economic factors working in its favour. UK’s GDP growth at 0.5% has recently beaten forecasts of 0.1% by a wide margin. Not only that, its currency – pound – has actually appreciated against the US dollar.The second factor that has impacted the rankings is India’s adoption of a new base year for its latest GDP series. As per the new data, which also makes use of a more refined methodology, the size of India’s nominal GDP in rupee terms has gone down. Sample this: As per the older base year of 2011-12, India’s GDP at the end of 2025-26 would have been Rs 35,713,886 crore. But under the new series, it is estimated to be Rs 34,547,157 crore. The new calculation methodology and base year revision presents a more accurate picture of the size of the Indian economy.Hence the currency effect has been compounded by a one‑time downward revision following India’s shift to a new GDP base year, which has lowered reported nominal levels without affecting real activity.
Does India’s drop to 6th indicate fundamental weakness?
Experts are confident that India’s growth story is intact and fundamentally strong, a fact that is reflected in projections of it continuing to be the world’s fastest growing major economy. They see technical factors behind the current slip, rather than any deterioration in economic fundamentals.It’s also interesting to note that while India will be the sixth largest economy in FY27, in the upcoming financial year, it is likely to overtake both the UK, and Japan to bag the fourth spot.Arun Singh of Dun & Bradstreet India explains this resilience with numbers:IMF World Economic Outlook (April 2026) data show that India’s GDP at current prices in domestic currency rose strongly from ₹318 trillion in 2024 to ₹346.5 trillion in 2025 and further to ₹384.5 trillion in 2026, translating into robust nominal growth of about 8.9% in 2024–25 and nearly 11% in 2025–26, among the fastest globally. In contrast, other large economies recorded more moderate domestic nominal growth – around 5% in the US, roughly 4% in China, 3–5% in the UK, 3–3.5% in Germany, and lower or volatile growth in Japan – underscoring India’s strong underlying momentum. In times of global economic turmoil, while GDP growth is expected to take some hit, most agencies and experts have pegged India’s growth to be strong. Incidentally, the IMF has even marginally raised its GDP growth forecast for FY27 to 6.5% despite the ongoing Middle East conflict.
“In India, growth for 2025 is revised upward by 1.0 percentage point relative to October, to 7.6 percent, reflecting the better-than-expected outturn in the second and third quarters of the fiscal year and sustained strong momentum in the fourth quarter,” IMF said in its latest outlook. “For 2026, growth is revised upward moderately by 0.3 percentage point (0.1 percentage point relative to January) to 6.5 percent, led by positive contributions from the carryover of the strong 2025 outturn and the decline in additional US tariffs on Indian goods from 50 to 10 percent, which outweigh the adverse impact of the Middle East conflict. Growth is projected to stay at 6.5 percent in 2027,” it added.
Will India become 3rd largest anytime soon?
The rupee depreciation and the nominal GDP revision has also pushed back India’s dream of becoming the third largest economy by the end of this decade. In the October 2025 estimates, IMF had said that India will overtake Germany to become third largest by FY30. However, the April 2026 projections see it reaching the third rank only by FY 2030-31.Experts point to the rupee’s depreciation versus the dollar to note that the road ahead is likely to be uncertain. Madan Sabnavis, Chief economist, Bank of Baroda is confident that India will continue to do well in the coming years.“We will definitely improve in terms of GDP growth which will be higher than that of other countries especially UK and Japan which are just above us. However, the rupee value will finally determine how India gets placed on the global scale,” he told TOI.Ranen Banerjee of PwC India sees rupee beginning to get support with the conflict containment, relatively lower oil prices and portfolio flow reversals with valuations getting attractive in recent times. “Thus, we should not be experiencing any further sharp depreciation of the rupee in the immediate term provided the conflict does not escalate and oil prices relatively softening from their highs and come down to a range of $85-90 a barrel,” he says.For Arun Singh of Dun & Bradstreet, looking ahead, India’s relative position in US dollar‑based GDP rankings will remain highly sensitive to currency movements rather than domestic growth dynamics. “Continued global dollar strength or capital‑flow volatility may cause periodic slippage in rankings despite robust fundamentals. Sustaining external macro stability and limiting undue rupee volatility will be crucial for India’s strong growth performance to translate more fully into higher global economic rankings,” Arun Singh told TOI.The Indian economy, largely driven by domestic fundamentals, is not immune to external shocks. High US tariffs of 50% from August 2025 to early February, and the ongoing US-Iran war have spelt back-to-back shocks for the economy. Even as experts stress on the resilience of the growth story, the vulnerability to higher crude oil prices, and other global supply chain disruptions is a reality. In such a scenario, India may well have to contend with fluctuating world rankings, while banking on its strong GDP growth to tide over disruptions.
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By Ben Casselman, Nour Idriss, Sutton Raphael and Stephanie Swart
April 18, 2026
Business
‘It’s just scale’: Local mom-and-pop car dealerships are growing or dying amid industry consolidation, rise of mega-retailers
Derek Sylvester with members of his family, team and mascot Molly, who was featured on the dealership’s logo.
Courtesy Sylvester Chevrolet
Derek Sylvester’s father built the family’s original Chevrolet dealership with his bare hands on Main Street in rural Peckville, Pennsylvania, in 1972.
The store and family have been a pillar of the village, outside Scranton, ever since. That was until late last month, when Sylvester and his family closed a deal to sell Sylvester Chevrolet to a New York-based dealer group.
“As a family, we decided this might be the time,” said Sylvester, who at 67 has been contemplating retirement. “Unless you’re a larger store, a much larger store, it’s a little bit harder to make money. … It’s just scale.”
Many of Sylvester’s family members plan to continue working at the dealership, but he said they didn’t feel they were in a position to continue running the business amid the rapidly changing automotive retail landscape in the U.S. The industry is facing a tumultuous adoption of all-electric vehicles, technological shifts such as artificial intelligence, and growing demands from automakers.
Sales of dealerships such as Sylvester Chevrolet are occurring across the country at a rapid pace as the business of selling cars, once considered the purview of mom-and-pop shops, has evolved into a lucrative trillion-dollar industry rife with consolidation that has drawn more notice from Wall Street and investors in recent years.
While the National Automobile Dealers Association, or NADA, reports that the vast majority of its U.S. franchised dealers are small business owners such as Sylvester who have fewer than six stores, the top retailers in the country have significantly grown.
The top 150 dealers sold 27% of all retail and fleet new vehicles in 2025, up from 24.3% in 2021 and 21.2% in 2015, according to Automotive News’ annual ranking of top automotive retailers. They also owned roughly a quarter of dealerships last year, up from less than 20% a decade ago, according to the trade publication.
Meanwhile, top publicly traded dealers such as Lithia Motors and AutoNation have ballooned to market caps of more than $6 billion each. Even online used-car retailer Carvana — and its $74 billion market cap, which surpasses the value of most car companies it sells vehicles from — has quietly started purchasing new vehicle franchises without disclosing its future plans.
“There’s a lot of money that wants to come to the industry,” Brian Gordon, president of dealer advisor and broker Dave Cantin Group, told CNBC. “And, generally, the industry is sort of aligned on how to value these things. That makes for a good climate for [mergers and acquisitions].”
Industry consolidation
Multibillion-dollar dealerships have been on the rise amid a decadeslong consolidation that has led to a grow-or-die mentality for many U.S. automotive retailers.
NADA, a trade association representing franchised dealers, reports the average dealership owner has between two and three stores, but the largest growth area over the past decade has been in medium-sized dealerships that own between six and 25 stores.
NADA reports 90.5% of its nearly 17,000 dealers own between one and five stores, down from 94.4% in 2016. Meanwhile, 0.2% of dealers own 50 stores or more, up from 0.1% during that time frame.
“It’s clear that it’s a consolidating industry, and it’s an industry that is going to continue to consolidate,” Gordon said. But, he added, that is happening at every level, especially the expansion of mom-and-pop shops to larger players.
Dave Cantin Group — the advisor for Matthews Auto Group, the dealer group that acquired Sylvester Chevrolet — conducts dozens of such deals a year and said it expects the pace of consolidation and mergers and acquisitions to continue to increase this year.
Matthews Auto Group is one of many regional dealership companies that has decided to expand. The family-owned company started in Vestal — in central New York, south of Syracuse — in 1973 with a single Chrysler-Plymouth store that has grown into a roughly $800 million business with 18 locations and 800 employees.
Rob Matthews, a second-generation owner and CEO of Matthews Auto Group, said the company’s decision to grow is ongoing and that it aims to be more profitable and better compete in its current markets of New York and Pennsylvania.
Matthews Auto Group CFO John Totolis (from left to right), Dave Cantin Group managing director Talon Fee, Sylvester Chevrolet President Derek Sylvester, partner Sylvester Chevrolet Neil Sylvester, Matthews Auto Group CEO Rob Matthews and Matthews Auto Group President Mark Gaeta outside Sylvester Chevrolet in Peckville, Pennsylvania
Courtesy image
“I think that’s certainly a competitive advantage. I think staying still is probably not the best play. You’re seeing continued scale,” Matthews said. “The trend is you’re just going to continue to see consolidation to allow you to stay competitive.”
That’s also why Sylvester said he wanted to sell his business, with stipulations about retaining the store’s dozens of employees — something that’s part of Matthews’ strategy when acquiring a store.
“There’s a lot of things that, because of our scale, we see we can really unlock a store like his,” Matthews said. “I think, honestly, it’s exciting in the sense that we’re just looking to give them more tools and hopefully let everyone work going forward.”
Growth of mega-dealers
Wall Street has taken notice of how lucrative and protected franchised dealerships are in the U.S. The franchised dealer system, which exists to sell new vehicles to consumers rather than automakers selling their vehicles themselves, is unique and heavily regulated.
“I think there’s endless upside. The opportunity for growth in our company is just endless,” Sonic Automotive President Jeff Dyke told CNBC during a recent interview. “I think having mom-and-pop dealers is really good for the business. The thing is, the mom-and-pop dealer is going to have to advance their thinking.”
Sonic Automotive, a publicly traded company with a market cap of more than $2 billion, has grown from 96 franchised dealership stores in 2015 to 134 to end last year. It’s also gone through a massive expansion of its EchoPark used vehicle stores and Sonic Powersports. The company’s revenue during that time jumped 58% to $15.2 billion last year.
Dealership stocks
Others, such as Lithia Motors, have been even more aggressive in growth. The Medford, Oregon-based company surpassed longstanding dealership group AutoNation to become the top U.S. new vehicle franchised dealer in 2022.
Lithia, with a $6.3 billion market cap, has executed an audacious growth plan, from $8.7 billion in revenue in 2016 to $37.6 billion last year. The company nearly tripled its new and used stores from 154 locations to 455 stores during that time frame.
John Murphy, a longtime automotive analyst who is a managing director of strategic advisory at buy-sell advisory firm Haig Partners, said he believes that dealerships remain an extremely lucrative market for investors, despite things settling down somewhat after companies saw inflated profits during the Covid pandemic.
“Structurally, there’s some real potential upside, and there is an increasing level of attention by existing capital in the dealership community as it stands right now from outside players, private equity family offices, other pools of capital on this limited number of dealers and finite number of dealers,” he said. “The earnings upside is increasing and there’s increasing attention, or demand, on the buy side of the equation.”
Mom-and-pops remain
All of that combines to make many mom-and-pop dealerships ripe for acquisition or expansion.
“There’s just so many factors that make competition for a small mom-and-pop dealership more difficult,” said Talon Fee, a managing director at Dave Cantin Group who led the sale of Sylvester Chevrolet to Matthews Auto Group. “It’s not to say that small mom-and-pop dealerships can’t continue to exist and thrive and survive, but they do need to have a plan.”
Fee and others said the top reasons for owners to sell are a lack of succession planning, a growing competitive and changing industry, and a lack of commitment to reinvest in the businesses.
“There’s a lot of outside capital that’s figured out how to come in, given the fact that you have to be an operator in order to get approved by a manufacturer,” said Gordon, of Dave Cantin Group.
But the industry is changing in other ways, as new automakers such as Tesla, Rivian and Lucid try to bypass the franchised dealer model and sell vehicles directly to consumers.
Such companies have continuously fought state laws to allow such sales, with Rivian recently winning a battle with car dealers in Washington state by threatening to take its case to voters with a ballot measure to permit direct sales.
It adds to the evolving U.S. automotive retail landscape that owners such as Sylvester and his wife, who also worked at the dealership, haven’t had to deal with in the past. It’s also something Sylvester and many other smaller mom-and-pop stores won’t have to compete with once they sell their businesses.
“I lived a great life, don’t get me wrong. But, hey, good things come to an end,” said Sylvester, who plans to spend retirement caring for a 92-acre farm in Pennsylvania. “We made a good living. You know, we helped the community out.”
Explained: On way to 4th largest, how India slipped to 6th rank & what it means for 3rd largest economy dream – The Times of India
Video: Why Your Paycheck Feels Smaller
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