Pub. 55 2014-2015 Issue 3

23 SPRING 2015 Texas Auto Dealers’ Impact on Retail • Auto dealers in Texas fall into their own retail sector, which is not included in the graphics on the preceding page due to scale. The total impact to the motor vehicle retail sector was $277 billion, contributing 107,000 jobs. • The next highest impact to retail occurred in the general merchandise sector, which generated $1.1 billion and 18,200 jobs. • Also generating more than $1 billion in economic output, the food and beverage sector is a major beneficiary of auto dealer operations. • In total, retail sectors in Texas benefit by $6.2 billion. • There were 91,371 total jobs created in retail sectors throughout the state, which is more than the total employ- ment of all dealership employees in the state. State of Texas Most Highly Impacted Industries • The impacts of Texas auto dealers reached 420 business sectors throughout the state of Texas. • The sector that captures all of the direct effects of Texas dealers is retail stores of motor vehicles and parts. Thus, it is by far the highest performing sector. Total output reached more than $277 billion, and employment sur- passed 106,000 over the 5-year observation period. • Other high-performing sectors, in terms of output, include sectors that directly support the auto industry, such as financial services, wholesale trade, advertising, warehous- ing, and insurance. • Transportation by truck – a key sector that directly serves dealers – breaks the top 20 most highly impacted sectors, with an impact of 13,900 jobs and $2.1 billion in activity. Community Impacts from Texas Auto Dealers Texas auto dealers contribute to their local economies in ways that are not captured in the economic impact models. These community impact factors have strong implications for local com- munities.While their impacts may not be possible to quantify, the void that would be left in their absence would be profound. The dealerships that operate throughout the state are primarily businesses that are family owned and operated. The ties between dealers and their communities are strong; the success of family businesses are directly related to the success of communities. This level of commitment to the community leads to high levels of volunteerism, charitable giving, and community involvement. Although it may seem counter-intuitive, dealers are a key agent in keeping costs down. It is a necessity due to the fiercely competitive market in which they operate. If they are not offer- ing low prices and exceptional customer service, then they are not selling cars. Dealers also add safety to the process. There is a dealer within minutes of every household in Texas. Maintenance and service repairs can be handled quickly and effectively. Additionally, when recalls are made, dealers are the ones responsible for carrying out those recalls. Family Owned & Operated The majority of dealerships, 85%, are family owned and oper- ated. When a business is run by a local entrepreneur, the impact of that business is magnified for the local community. The majority of company profits will be invested locally, rather than transferred out of the region – or even out of the state – to corporate headquarters. On an average annual basis, dealerships are responsible for about $400,000 in capital investment. As dealerships grow and expand their operations, a typical dealership will end up investing more than $7 million into the local community. Without the Franchise Laws, the industry is likely to shift toward a smaller number of large dealerships, operated by corpo- rate storefronts. While the overall level of capital investment may not change substantially, the consolidation of investments would also lead to the consolidation of economic impacts. The impacts would shift toward larger communities and away from smaller communities – the communities that are much more dependant on capital expansion projects. For smaller communities, dealerships tend to be among the largest employers. The average auto dealer employs 73 people. The jobs offered accommodate a wide range in skill sets, includ- ing upper-level management, financial services, sales, customer service, and maintenance and repairs. Few other businesses are able to meet the demand for so many types of workers within one operation. Moreover, many dealership owners are involved in their com- munities and encourage their employees to become involved as well. They care about the community because they themselves are members of that community and in many cases, have grown up in that community. The level, quality, and focus of community investments made by auto dealers would not be matched by other corporate businesses.  The impacts ofTexas auto dealers reached 420 business sectors throughout the state ofTexas.  The sector that captures all of the direct effects ofTexas dealers is retail stores of motor vehicles and parts.Thus, it is by far the highest performing sector.Total output reached more than $277 billion, and employment surpassed 106,000 over the 5-year observation period.  Other high-performing sectors, in terms of output, include sectors that directly support the auto industry, such as financial services, wholesale trade, advertising, warehousing, and insurance.  Transportation by truck – a key sector that directly serves dealers – breaks the top 20 most highly impacted sectors, with an impact of 13,900 jobs and $2.1 billion in activity. Most Highly Impacted Industries Sources: AE, IMPLAN, TADA State ofTexas TOP INDUSTRIES IMPACTED IN TEXAS – ECONOMIC ACTIVITY Rank Industry Total Economic Activity 1 Retail Stores - Motor vehicle and parts $276,945,590,648 2 Real estate establishments $11,698,864,919 3 Financial Services $8,521,021,057 4 Imputed rental activity for owner-occupied dwellings $8,381,584,427 5 Wholesale trade businesses $6,586,193,473 6 Advertising and related services $6,236,064,991 7 Telecommunications $5,658,739,415 8 Food services and drinking places $5,117,159,137 9 Electric power generation, transmission, and distribution $4,386,511,406 10 Insurance agencies, brokerages, and related activities $3,924,101,274 TOP INDUSTRIES IMPACTED IN TEXAS – JOBS Rank Industry Jobs 1 Retail Stores - Motor vehicle and parts 106,832 2 Real estate establishments 88,431 3 Food services and drinking places 84,256 4 Employment services 54,226 5 Warehousing and storage 31,455 6 Services to buildings and dwellings 29,986 7 Offices of physicians, dentists, and other health practitioners 28,694 8 Wholesale trade businesses 27,827 9 Private hospitals 24,620 10 Business support services 23,932  FRANCHISED DEALER — CONTINUED ON PAGE 24