The car dealership revolution

The car dealership revolution

Few people like car dealerships. They are stressful and boundless places, where it is difficult to shake off the feeling that someone is making a bad deal. At a time when the automotive industry is increasingly focusing on electric and moving online, companies like Honda are rethinking every aspect of the buying process, including the spaces in which it occurs.

On May 18th l 'Japanese company announced the launch of a new design for US dealers, which will occupy a smaller area, becoming modular and flexible; the exhibition spaces, for example, could be transformed into offices for employees. Dealers will then be equipped with electric vehicle chargers, as the company aims to sell half a million electric vehicles in the US by 2030. "Our dealers are looking to modernize and digitize their business," he told reporters last week Mamadou Diallo, vice president of sales for American Honda.

The upheavals of the pandemic As with many recent transformations, the change is partly a consequence of the pandemic. Car manufacturers have had to contend with a shortage of semiconductors, which is no small problem for vehicles that need hundreds and sometimes thousands of chips to operate. The bottleneck in the supply chain means that new car dealers have fewer vehicles available to show to customers. In the meantime, following the example of companies like Tesla and Rivian, the big automakers have started experimenting with online booking and sales. Ford sold the first models of its electric sports car, the Mustang Mach-E, online and accepted online reservations for its electric pickup. Last year, Volvo said its electric vehicles, which the automaker says will account for 100 percent of sales by 2030, will be sold exclusively online.

WiredLeaks, how to send us an anonymous report This could make more convenient to buy cars, while also facilitating their sale. Building the cars to fulfill customers' online orders would eliminate some of the uncertainty in the vehicle manufacturing industry. Consequently, the number of models that unexpectedly find themselves languishing in showrooms would also decrease, eventually being sold at a reduced price. "We have found that operating with fewer vehicles in dealerships is not only possible, it is also better for customers, dealers and Ford," Ford Chief Executive Jim Farley told investors last summer. But we are also promoting. a significant increase in the number of customers who configure and order their vehicles online, so that they have a better view of real demand ".

Impact on customers and future prospects Adjustments due to the pandemic do not always go in favor of car buyers. In the United States, dealers report that market and inventory restrictions allow them to offer fewer discounts to customers buying new cars. Buyers pay more and dealers get higher margins for every sale. But industry experts are divided over whether these conditions persist beyond the health emergency and supply chain problems. However, it cannot be ruled out that the age of the endless ranks of brands, models and colors is over forever.

Since modernizing buildings takes time and money, physical changes to dealers it could take years or even decades. Diallo, the Honda executive, explains that the automaker's new dealership design "is not a program we are forcing dealers to adopt," but a direction that Honda wants its dealers to take. Brian Kelly, Vice President of the Volkswagen Network of America, said the automaker is considering similar adaptations.

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Arrow Most people, however, will continue to interact with dealers in some form. In the United States, for example, even though consumers have become accustomed to buying appliances and clothing online, consumers still struggle to make major purchases such as vehicles online. During the pandemic, however, car buyers in the country were more familiar with internet transactions; Auto e-commerce sales grew by nearly 25 percent in 2021, nine percent of all U.S. e-commerce sales, according to data from investment banking firm Cowen. Cowen analyst John Blackledge calls the pandemic "a big push" for online auto dealers.

Big changes in the way cars operate herald transformations in dealerships too. Inspired by Tesla, more and more car manufacturers are building software-driven cars that can be overhauled or updated online. In the United States, the government wants electric vehicles to account for forty percent of auto sales by 2030, and California, the country's largest auto market, plans to ban gasoline vehicle sales by 2035. Electric cars need to be serviced less frequently than petrol vehicles. For dealers, who mostly earn from vehicle maintenance, electrification could therefore lead to more limited profit margins. Car buyers may be seeing early signs of industry changes within car showrooms.

This article originally appeared on US.

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