Tech has completely changed the car business.
But the real change is only starting.
Dealerships will get DISRUPTED over the next 10 years.
1. Service will significantly outperform Sales
Traditional dealerships sell many things:
Cars, parts, service and more.
But I predict that over the next decade,
Service departments will become a dealership's bread-winner.
- Record-high inflation is leading people to hold on to their cars longer.
- Service Margins are 3-4X better than Sales.
- Fast-growth retail entrants such as Carvana and Vroom rely on dealers for post-sale care.
This leads us to the next thing....
2. Dealerships will transform into fulfillment centers
73% of people only want to visit a dealership to test-drive a car.
But most dealers STILL haven’t adapted to this reality.
Over the next decade, we will see much leaner dealership concepts.
Here's how this will look...
- Smaller staff, but better trained.
- Larger selection of cars, but mostly off-site and available for delivery.
- 10X faster buying experience, but mostly self-service and online.
But the next point will leave the biggest impact of all...
3. Unprecedented transparency
- No-haggle pricing will become table-stakes.
- Bogus fees will get eliminated.
- Every car's supply chain history will be publicly available (in far greater detail than a Carfax report).
This will all lead towards the final nail in the coffin…
4. Record-levels of industry consolidation
2021 was a record year for Franchise-dealer consolidation.
And I believe the trend is only going to speed up.
Dealers will fail to compete as:
- Consumer expectations rise to new heights.
- Big players with deeper pockets invest heavily in the customer experience.
- Technology becomes increasingly sophisticated and difficult to manage.
With all that said, there is a silver lining...
5. Car buying will become MUCH better
- Transparent purchase experience
- Larger selection of cars
- Flexible fulfillment options
- Better-trained staff
- Frictionless process from start-to-finish
Sounds pretty good, eh?