Study: U.S. Dealerships Face Leaner Times, But Not Destruction… Probably
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)]
A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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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?
Raising the prices on their used car inventory will be the US dealers' salvation.