Introducing the Automotive Retail Solutions Strategic Insights Series

As industry experts, we (partners at AutoMarket Insights - AMI) have often wondered if there are up-to-date and easy to understand strategic analyses that address the multitude of solution categories in the automotive retail industry. We could not find a comprehensive set that we could confidently bring to our clients, so we decided to create our own version! In addition, we believe that “rising tides raises all boats”. Therefore, we have decided to share our work with you, the wider stakeholders within the automotive industry. We welcome your feedback, questions, and insights. Additionally, if you would like to connect with us to brainstorm how we can help your business with its next strategic growth opportunity, please email us at hello@automarketinsights.com or visit HOME | Auto Market Insights.

The basic premise of AMIs strategic insights

We believe in keeping things simple. Overtly complex strategy and execution plans, while looking good on paper, seldom work out in reality. Instead we focus on evaluating one or more solution categories that a company may be part of in order to understand its strategic baseline. Then, we analyze the current position of that company within its solution category and provide recommendations on how the company can become the best in its category set. Finally, we think about how the company can traverse into adjacent solution categories and achieve long term business goals such as strengthening one’s competitive moat, accelerating growth through build, buy, and partner methods, and increasing profit margin profiles. Therefore, our strategic insights series (starting with this post) will focus on holistic analyses of solution categories where we visually juxtapose and describe key dimensions such as:

• Core market attractiveness such as market size, growth rate, and profitability 

• Competitive structure and strategic moats

• Disruption potential and innovation drivers

• Go-To-Market, distribution, and buyer dynamics

• Data platform, interoperability, and AI applicability

• Operational and process complexity

U.S. Market Profitability quadrant chart - why is it important, how to read it

In this edition, we have defined and mapped select auto retail solution categories into a United States TAM (Total Addressable Market) vs. Profitability (EBITDA%) chart, resulting in the below 4-square or quadrant. Additionally, we have layered in our estimate of the number of competitors in a particular solution category (i.e., how crowded the space is). Finally, we have added a strategic moat indicator for an established company in that solution category (i.e., how hard is it for a new entrant to get into the space.)

A highly profitable, large TAM solution category with limited competitors means that successful companies in that category are highly valuable. It is likely that a new entrant will need to invest a material amount of capital and time to enter this special “club”. And even then, it involves a significant risk for the newcomer since the incumbents are well entrenched. Conversely, a less profitable and small TAM solution with many competitors in that category means that companies will likely not command large multiples of value in that space, unless they can “rise above the rest” in the category and can beat new entrants on an ongoing basis. This categorization does not necessarily address “actionability” in terms of corporate development activity. We plan to address actionability in subsequent posts.

Total Addressable Market is measured in terms of annual SAAS fees attributable to a US dealer’s spend of wallet. There are two industry forces that will help increase TAM for some of these categories, namely (i) digitization of payments and (ii) use of Agentic AI. We do not regard these transformative technologies as solution categories (which we align with dealership operations and profit centers). Instead, we expect that dealers will move expense dollars from legacy/manual operational buckets to these integrated technologies that promise higher efficiencies. We predict that this will result in a larger structural TAM opportunity for categories such as Customer Experience and CRM as well as Service Relationship Management. AMI is currently analyzing the impact of these transformative forces and will update TAM estimates accordingly in 2026.

Another aspect of the AMI Profitability-TAM Quadrant is that it points out opportunities for consolidation and expansion. For example, low profit margin + high competitor count segments will likely result in consolidation opportunities. Customer Engagement (CX) technology falls into this area - we predict that there will be several entrants into this space over the next 24 months, especially since better AI models will make it easier to build CX applications. However, eventually through attrition and consolidation, the CX bubble will become green (less number of competitors) while unique access to proprietary data sets will make the bubble size (strategic moat) bigger. 

The next strategic action in this area of solutions could be the merger of CX, CRM, CDP. and Service Management companies that create a super segment while pushing the resulting combination into the “Large Market, Large Margin” segment. This combination starts taking on DMS like strategic attractiveness characteristics. While a couple of such merger plays have been executed in the industry, the key to success is enablement of modern platforms that can truly create the expected integration, workflow, and data upside - this is something that has eluded our industry for decades.

Instead of going through every iteration of the possibilities for each solution segment in this post, we are offering the following summary insights as a thought starter.

It should be noted that we have not included all solution categories in this quadrant. For example, we plan to add parts, accessories, service operations, and standalone analytics as  separate categories in subsequent editions. Additionally, in early 2026, AMI plans to release its updated AutoScapes explorer tool, which will provide next level detail about the sub-categories and companies within our solution category definitions.  

We welcome individualized discussions on specific topics that you would like for us to consider throughout our quest to make our analysis more informed.