AutoTrust Dealer Alliance says its dealer-owned network has grown to more than 300 active franchise dealerships less than a year after launching, as the company works to give smaller and mid-sized dealer groups some of the economic advantages typically associated with large public dealer groups.
The Bloomfield Hills, Mich.-based alliance uses the combined purchasing volume of its members to increase negotiating leverage with suppliers and create opportunities for lower costs and additional revenue.
The model is different from traditional consolidation. Rather than acquiring dealerships and placing them under corporate ownership, AutoTrust allows dealers to remain independently owned while participating in the network.
The company says savings generated through the platform are intended to be returned to participating dealers through quarterly profit distributions. AutoTrust also plans to expand its programs across more areas of dealership expenses and revenue.
“The public groups didn't get their advantages because they're better operators. They got them because of size,” said Dave Mondragon, CEO and founder of AutoTrust Dealer Alliance. “AutoTrust gives dealers that same economic advantage, creating new revenue opportunities from the business they are already doing.”
AutoTrust says its network will continue expanding as additional franchise dealer groups move through the evaluation and onboarding process.
Why the model could matter to the bottom line
For dealers, the potential value of collective buying power goes beyond getting a better price on a particular product or service. If a dealer can reduce costs across recurring expenses while maintaining the same level of operations, those savings can flow directly to the dealership's bottom line.
The same applies to revenue opportunities. AutoTrust's model is based on the idea that dealers can generate additional value from transactions and services they are already handling, rather than having to find entirely new sources of business.
That can be particularly meaningful for smaller dealer groups competing against organizations with significantly greater purchasing volume. A large dealer group may be able to negotiate better pricing simply because it represents hundreds of rooftops. An independent dealer generally has far less leverage on its own.
The question is whether enough dealers participating together can create similar scale—and whether the resulting savings and additional revenue are large enough to make a measurable difference after any costs associated with participating in the alliance.
If AutoTrust can deliver on that model as its network grows, the potential benefit is straightforward: lower operating costs, stronger economics on existing business and more profit retained by the dealers themselves, without requiring them to sell their dealerships to achieve scale.
