Creating a New Market Place in the US Auto Retailing Industry (Condensed Version)

Competing head-to-head in a mature, slowly growing market can be cutthroat. The US car retailing industry was very much characterized by the classic symptoms of an unattractive industry. Players very much disliked competing in this difficult environment but did not see how they could break away from the pack. The case Creating New Market Space in the US Auto Retailing Industry will show how some players, such as CarMax, AutoNation, Autobytel and iMotors have systematically broken away from the pack and have reshaped the contours of the US car retailing industry through their creative strategies.

Most companies focus on matching and beating their rivals and as a result develop strategies that tend to converge along the same basic dimensions of competition. These companies share an implicit set of beliefs about how to compete. They share a conventional wisdom about who their customers are and what they value and about the scope of products and services their industry should be offering. As the rivals try to outdo one another, they end up competing solely on the basis of incremental improvements in cost, or quality, or both. The objective of the case is not only to show specific ways by which creative strategies are conceived and put into action but also to demonstrate how these strategies recreated a hitherto unattractive industry, such as used car retailing in the US, into a rapidly growing industry.