If there’s one thing that everyone can agree on – these are not boring times we live in. The pace of change shows little evidence of slowing, and with that comes uncertainty. As with any industry, this holds very true for automotive.
There was no shortage of worrisome automotive headlines in 2019. While there were many to keep an eye on, things are far from the all-doom-and-gloom state of affairs some might have us believe. Though this isn’t an exhaustive list of happenings relevant to dealerships in 2019, here are three things that we found particularly noteworthy:
It goes without saying that we’re squarely on the side of dealerships as challengers to the traditional dealership model made waves in 2019. Even if we weren’t happily embedded in the dealership technology space, we could go forever without yet another dealership-dissing commercial from them.
Fortunately for us, but not so much for Carvana, that could happen sooner than later. Attempts to remove dealers, more specifically people, from the car-buying equation is coming at a cost, year after year. Sure, they’ve gained some market share based on novelty. But it seems once that novelty wears off, customers have a less-than-stellar experience with Carvana. So removing the human element from the car-buying experience doesn’t work so well after all and we’re not surprised.
Similarly, ridesharing services like Uber are proving to have significant problems. Tesla continues to attract attention, but increasingly not the kind of attention a company might want. While Uber and Tesla have both certainly shaken things up, it’s questionable how long either can continue.
Clearly the Carvanas, Teslas and Ubers of the world have disrupted the status quo in automotive, but there’s a silver lining: each has shaken things up just enough to move our industry out of complacency.
The flaws in these alternate business models highlight the value only actual human beings at a real dealership can provide. We’re glad that these challengers to the dealership have brought various shortcomings to light. The car-buying friction points they purport to resolve can be seen as teachable moments, opportunities for moving towards a more customer-centric approach and a positive perception of dealerships as a whole.
Speaking of Tesla, one thing they’ve gotten right is making electrified vehicles (EV) not just more mainstream, but desirable. Well…maybe not quite so much with the Cybertruck, but still. Q3 of 2019 was the first time that EVs outsold manual transmissions. That may not seem like a huge deal on the surface, but it’s a subtle indicator of a profound truth: EVs are here to stay.
EVs may not replace combustion engine vehicles next week, but the writing is on the wall. Just as Ford celebrated the 55th anniversary of the original pony car in 2019, it also introduced a Mustang as their first all-electric vehicle, the Mach E. An electric F150 is in the works and Ford also introduced plans for the largest EV charging network in North America. Ford isn’t the only established OEM moving forward with electrification.
What does this all mean for dealerships? Dealerships will remain an automotive imperative.
To a large extent, EVs are still vehicles that need to be sold and serviced, not that different from internal combustion engine (ICE) cars and trucks. Smart dealerships will adapt to provide the vehicles and customer-centric service buyers want– regardless of the vehicle type.
While this might look slightly different as fossil fuel-powered vehicles slowly subside and EVs replace them, dealerships that shift with automotive innovations will continue to prevail. The adjustment from ICE to EV will perhaps be more substantial with regards to fixed operations, but customers will still need dealerships to provide sales and service. Whether they’re buying V8-powered duallies, EVs, or antimatter-powered flying saucers, you’ll be there for them.
Following many industry headlines over the past year, you might think the automotive business world is crumbling. To be fair, alarming narratives about scary dealership disruptors attract attention, and not all of the news has been great in 2019.
We won’t go into the dramatic ups and downs we’ve seen – there’s enough of that to follow in the retail auto market. The factors influencing the peaks, valleys and plateaus of car sales are beyond the scope of this post, but it’s worth noting that many drivers are hanging onto cars longer than they used to. This has resulted in higher demand for used vehicles and used car prices were the highest on record this past summer. All things considered, that may work out to one up/ one down as preowned vehicles remain profitable, even if sales are less frequent.
While 2019 has been a bit of a rollercoaster, new vehicle sales were actually up in November, and sales may well top 17 million again, for the fifth straight year.
It seems rumors of the demise of the American automotive industry as we know it were a smidge exaggerated in 2019. But there’s no denying that times are changing and dealerships need to adjust to flourish in a customer-centric marketplace.
So, no matter what 2020 brings, there is one thing we know for certain. You will adapt. You will thrive. And we’ll be right next to you, fighting for you every step of the way.