The Death of the Car Dealership

Would you buy a new car online?

This concept is repugnant to new car dealers, but as a species the choice to adapt or die is already upon them. Most are, apparently, choosing to dodo-up.

Like vinyl records previously, car dealerships face extinctionOnce you decide to buy a particular new car it becomes, effectively, a commodity – at least inasmuch as the particular new car offered by Dealership X is identical to the same model offered by Dealership Y. And, with commodities, the only variable that really matters is price.

Dealership sales staff are well established in decline. Previously (before iPods played HD video) a salesperson could inform you about the nuances and technicalities of your particular new car. Dealerships were a valuable repositiry of information and guidance. Not any more. These days, serious customers routinely rock up to dealerships more clued-up on the car they want than the salesperson, thanks to diligent internet research (often quoting specs from the carmaker’s own website). So you can scratch ‘product expertise’ from the services offered at dealerships today.

‘Geographic proximity’ is another commercial proposition that’s becoming irrelevant thanks again, in part, to the web. For starters you no longer have to travel to a dealership to get the information or have a good look at the vehicle. This can all be done from the comfort of your laptop – and in a far less stressful and unconfrontational or adversarial environment.

Which brings us to the ‘dealership experience’, which is often unpalatable despite the reams that are written about it in marketing tomes. See, buying a new car is a very positive experience overall. Once you decide on the car, and you decide to go out there and acquire it, you’re on a high. Once that new car is parked in your driveway, on the eve of its first real drive – another high. In between these two crests is generally a rather depressing and stressful valley of discontent and frustration and stress, filled with unpleasant and technically challenging obstacles.

Most buyers – at best – feel mildly violated while they’re in this valley. Because dealing with car dealers is not one of life's joys. 

Ahhh ... the old giant inflatable car-holding gorilla trick, eh? It's still too little, too late

Independent commercial operations also put pressure on dealerships. On the commercial side, fleet buyers help government and business customers choose their fleets, arrange finance and negotiate the purchases. This is a tidy (and profitable) game that’s sprung up because dealerships have been, collectively, historically too lazy to grab it. While they were busy goofing off, a bunch of motivated players effectively sidelined dealerships from the fleet volume game. And the same is almost certain to happen in the retail market because the whole dealership apparatus is tantamount to steam powered. 

If you’re a private buyer, you can always use a car broker – who will put your vehicle of choice out to tender across dozens of dealerships (that’s impractical if you’re wearing out shoe leather or driving to interview dealers face to face – who has the time?) A car broker returns within hours with an offer at the lowest price and can even negotiate your trade-in. The new vehicle gets delivered to your door with a full tank of fuel and (cue the best bit) you never set foot in a dealership.

Dealers, of course, regard these operations as parasitic. For exactly the same reasons that consumers benefit from them.

The trend to online automotive retailing is inevitable. China’s ‘Henry Ford’, Geely boss Li Shufu, is already selling an online-only edition of the Panda microcar. Dealerships are still engaged, but only for a test-drive, delivery and service. The sale takes place entirely online. This trend, if it comes here, could free up a lot of prime retail space.

The dealership of the future is likely to be nothing more than a service and test-drive facilitating centre.

But don’t worry: in the future your grandkids will be able read about the brontosaurus, vinyl records, and buying vehicles face-to-face, on Wikipedia. Or you can bore them silly with stories about how you actually used to talk to a car salesman in person. You know, shortly after plastic was invented. When people took photographs on film.