Auto retail stores will continue to consolidate, and major markets will be dominated by groups, says Scot Eisenfelder, CEO of Affinitiv, a marketing technology company serving automakers and dealers, in a recent article in WardsAuto.com. Eisenfelder outlines other trends that will affect the future of auto retailing:
- Digital retailing. “More of the car-buying process is moving online,” he says. Most customers still want to go to the dealership to take a test drive and sign paperwork. But in coming years, more will be willing to complete the transaction online.
- Retail gross margins are compressing. It’s hard to imagine them being squeezed more than the current 2.5 percent, but other industries have learned to live with very thin margins.
- F&I grosses are vulnerable. We may have already reached the maximum gross that customers are willing to pay.
- Used-vehicle operations are growing in scale and sophistication. Dealers have placed more emphasis on used vehicle sales for some time to make up for the decline in new-vehicle profits. Used-vehicle managers will have more choices for sourcing than trade-ins and local auctions. For instance, customers may be persuaded to sell their used car to a dealership even if they don’t buy a new one there.