By on November 18, 2016

dealership

With Amazon teaming up with Fiat Chrysler Automobiles to sell cars online in Europe and companies like Lynk & Co wanting to destroy the dealer model, it’s had to know exactly what the future of car buying will look like. Retailers are equally confused, so the National Automobile Dealers Association hired a consultant to study the future of U.S. dealerships.

The study’s findings hinted at leaner times and the dark cloud of an autonomous transportation network looming in the distance.

Automotive News reports that consultant (and mustache aficionado) Glenn Mercer see an evolution coming but not the end times. “We see change coming to the dealership but not a disruptive overthrow of the business model,” Mercer said on Tuesday at this week’s AutoConference L.A.

The research intended to examine the current state of dealerships and establish where they might find themselves in 2025. Commissioned in March, Mercer went through some preliminary announcements and key findings at Tuesday’s meeting with NADA.

The research suggests that U.S. dealerships will shrink to around 16,500 stores in 2025, down from just under 18,000 today. Consolidation of dealer ownership will also continue.

Light-vehicle sales will average between 17 and 18 million units, which are similar to today’s numbers, but Mercer expects the market to shift toward more expensive vehicles.

While the study expected electric vehicles to expand deeper into the market, it doesn’t suggest that they will reach beyond a 5 percent share before 2025.

The largest perceived risk to automotive retailers, according to the study, was the combined threat of mobility services and autonomous vehicles. “Our own estimate is that this is relatively unlikely to happen, but, if it did happen, it would be cataclysmic and has to be flagged,” Mercer said.

“If mobility services converge with autonomous vehicles, such as what Uber is testing in Pittsburgh today, and, in so doing, succeeds at breaking the age-old bond of ownership between Americans and their cars and trucks, that would change things dramatically.”

[Image: Faris/Flickr (CC BY-NC-ND 2.0)]

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27 Comments on “Study: U.S. Dealerships Face Leaner Times, But Not Destruction… Probably...”


  • avatar
    indi500fan

    1500 stores closed in the next 8 years is a pretty small number.
    About 4000 closed up in the 2009/2010 era.

  • avatar
    Robbie

    Land of the free; and yet, it is forbidden by the government to buy a car directly from the manufacturer.

    • 0 avatar
      indi500fan

      Money talks. IIRC the biggest contributors to state legislators are car dealers and real estate developers.

    • 0 avatar

      I’ve always been curious how folks think this would be a great improvement. First, the manufacturers (other than Tesla) don’t really want to deal with the people in that fashion. 2nd, anyone buying vehicle on TrueCar like services is generally buying below invoice cost. Do you really think Ford will have to undercut Ford to stay in business like the dealers do? Profit will still vary by management and sales of other products and financing. I think it would generally drive prices up, limit options, and put a bunch of people out of work who currently make a decent living on a more open market.

      • 0 avatar
        PrincipalDan

        I think when enthusiasts dream of ordering direct from the manufacturer they dream of being able to order exactly what they want and nothing they don’t. Some dealers will work with you to order, some will not.

        Personally I’d be interested in a Malibu with a 2.0T but not the Premier trim package, LT2 is just fine by me. Unfortunately few dealers with 300 miles of me have that trim/engine combo on the lot.

  • avatar
    jmo

    I wonder if there will be any change to the American habit of buying cars off the lot vs. ordering them? I can imagine people used to limitless variety online being put off by picking one of whatever happens to be on the lot. Or, if they order a car, having it available in only three trim options and 5 colors.

    • 0 avatar
      brn

      But I want to drive the car before I buy it. Once I drive one I like, I want it NOW.

      • 0 avatar
        yamahog

        And that’s good for you, congratulations. But why does the Government need to say that’s the only system that should be legally permissible?

        If Renault wants to blow money on having crappy stores that employ Americans, god bless ’em.

        • 0 avatar
          brn

          yamahog, the fun part about typing is that you don’t get to hear the tone of my voice.

          I agree with you. However, many buyers are accustomed to exactly what I described and would have a difficult time adjusting. I do agree that it’s silly legally limit it to that experience.

    • 0 avatar
      Rnaboz

      I ordered my MINI custom made to MY wishes, it took 2 months. However, I will keep it until they ban cars from the roads.

  • avatar
    Ol Shel

    Dealers deserve to fail. They’re staffed by poorly educated Bros who don’t seem to know or care about customer service. ANd then there are all the gimmicks designed to “beat” the customer.

    It’s just a foul industry.

  • avatar
    Jeff S

    The manufacturers are limiting the trim options and colors anyway so why not offer ordering the vehicle you want on line. If I don’t want black or white I would settle on silver or beige. If I could order a silver truck with a manual on line instead of being forced to take white or search far away dealers for a silver truck with a manual. I would just as soon bypass the dealer and go directly to the manufacture or to a third party like Amazon or COSCO. Just make it a little below MSRP with delivery to the nearest store or lot. Would love to be offered the choice to order a silver Colorado Base model with a 6 speed manual with a block heater as an option which is offered on cars.com.

    • 0 avatar

      You could go to ANY Chevy store and they’d be happy to place an order for you a little below MSRP. Why trust other third parties over a dealer? COSCO has a buying program (which is a little below INVOICE, not a little below MSRP). Your wishes are made true!

  • avatar
    EX35

    Having just gone through the process of buying a new car where I had to churn through no less than 30 truly awful dealerships to find the diamond in the rough 1000+ miles away from my house, I welcome this change!

  • avatar
    dr_outback

    I work as a Service Advisor. It will be very difficult for many people to plan their day based on a ride sharing program or shared ownership. I deal with people every day that can barely stand a moment without THEIR car. They must have a Loaner, or they can’t wait for a service, or the car MUST be Valeted to their home and they must be provided a Loaner in the off chance that they’ll have a whim to scoot out to Starbucks. A few extra days for a repair leads to an unhappy customer even if they are provided a Loaner or their vehicle is Valeted. Their emotional attachment to their vehicle is strong.

  • avatar
    Lou_BC

    What ever happened to the days when you had to drop off your vehicle and arrange your own ride home?

    • 0 avatar
      dr_outback

      Somehow the domestic brands selling high priced but non-luxury cars and trucks and many of the non-luxury Japanese brands can get away without a Loaner fleet. But by a low-end Audi, BMW or Mercedes and suddenly the expectation of Loaners and Valet service is set. Oh and then they can also complain about the costs of the services.

  • avatar
    Joss

    If I could count on a clean, safe taxi – without a driver to tip – on a reliable basis. I’d say to heck with ownership & transit.

    Seriously what’s there to enjoy in driving and private ownership in this age of high density living?

  • avatar
    John

    Raising the prices on their used car inventory will be the US dealers’ salvation.

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