I recently posted about “the end of car dealerships.” Consider this part 2: Wired recently published “The Incredible Shrinking Car Dealership.”
First off, this is a good look for anybody outside automotive retail at the pressures going on within the dealership model. And for those inside, this is a good look at how you are perceived.
Second off, I’ve been talking to my stores since 2018 about Toyota’s New Zealand dealerships jumping to sales agencies. Dealers no longer have to finance a huge inventory (they just have a demo fleet) or figure out payment when trading stock with another dealer (the factory delivers as ordered). And the factory saves money by removing volume incentives–dealers get paid a “fee-for-service” immediately. Customers benefit in the elimination of haggling and of pressure to buy something in inventory.
If you have concerns, Mr. or Ms. Car Dealer, so does Kia and Mazda. They see too much value in the dealership network for taking care of customers and say they won’t mess with their retail partners (see here for a British perspective).
It’s too early to tell. Enjoy a front-row seat into the biggest revolution in the car business since it started.
But one thing is sure: As the New Zealand story indicates, the relationship between the factory and the dealer is key. Open dialogue–something we talk about a lot around here–was the only way that jump to agencies was ever attempted. It was a decade in the making. Toyota understands empathy.
(Oh, and third off, hats off to Wired for keeping the word “hacked” out of its story. Back in the day, it seemed like every time anybody did something newsworthy, Wired would describe it as a person or company “hacking” whatever industry they were in. Lord knows I love a good cyberpunk tale, but time to move on!)
UPDATE: As this was going to press, news out of Europe: BMW and Mini may also go to the agency model there.