Future dealerships: fewer, more connected, more focused on service

Future dealerships: fewer, more connected, more focused on service

In ten years, the U.S. will have fewer dealerships with fewer owners. The dealerships will offer extensive automation to finish the buying process the customers started at home on their phone or other mobile device. And a greater proportion of dealership profits will come from the service department. Those are the conclusions of a recent study of the next 10 years in the auto industry, commissioned by NADA and reported in WardsAuto.

The studyês author, automotive researcher Glenn Mercer, predicts in 10 years that the dealership count will decrease to 16,500 from todayês 18,000. Those dealerships will be owned by 6,500 dealers, down from 8,000 today. Most of the stores will remain in private hands.

Industry observers have talked for many years about the connected store of the future. Customers will continue to favor the convenience of doing online research at home, finishing the transaction at a connected dealership, concludes the WardsAuto piece, which is based on interviews with dealers and IT providers. Wes Lutz, NADAês 2018 chairman-designate, said his in-store customers are focused on their cell phones, not on dealership screens.

The reliance on service profits will continue a current trend. NADA chief economist Steven Szakaly told WardsAuto that autonomous and mobility-on-demand cars (such as those for Uber and Lyft) will be driven many more miles than personally owned cars and will need a lot of maintenance. Satellite service operations will become more widespread. Service profits will become even more important as vehicle sales margins are squeezed.