IS THE CAR DEALERSHIP MODEL OUTDATED?

The future of car dealers will be becoming a network of mobility hubs.

The world is changing faster than ever triggered by major global trends:  technology, innovation and connectivity. Consumers are seeking equilibrium in all aspects of their lives and their consumption behavioral drivers are constantly changing. 

The Global automotive sector is also undergoing a deep transformation, even faster than other industries. Connectivity, Autonomous Driving, Shared Mobility Services and Electrification (CASE concept) are accelerating the automotive industry transformation towards a duality – dealers vs. direct sales, physical vs. digital, product vs. services.

Biggest automakers CEOs declared that during the next years the automotive sector is going to change more than in the past 100 years.

With that in mind, the traditional car dealer business models are also set to dramatically change in the upcoming years. Dealers will not only be allocating selected cars in showrooms but thinking on customer touch points and on creating suitable spaces to boost other mobility experiences. Becoming a mobility service hub will be one of their primary objectives.

Frost & Sullivan predict a potential Car Sharing market of roughly 36 million users in 2025, with a fleet of slightly less than half a million vehicles distributed in the main cities and MWC19 Barcelona, Best Mobile Innovation for Automotive, estimate 7.5 million shared car fleet in Europe in 2035.

Furthermore, more players coming from a group of non-traditional companies in the sector and disruptive companies without any previous experience will force dealers to rethink the relationship with the brand and redraw the business model of vehicles in the market. 

Companies such as Apple…. prove this: they do not come from the sector itself. However, they are considered potential threats, by having the capacity to be rivals due to their disruptive services and products, the fact that they listen to their customers and offer what they ask for through the creation of unique experiences,

It seems inevitable that dealers have to be transformed or, more accurately, rapidly adapted to become mobility services areas in order to ensure its continuity as a crucial link of the chain. The new role of mobility hubs in urban areas will favor and strengthen Car Sharing, Subscription and other mobility services.

The main drivers for this change are: 

  • Technology: Introduction of new mobility services software.
  • Customer Experience: Focus on delivering unique experiences.
  • Skills: Train employees on new roles and skills.
  • Data: Enable customized treatment utilizing data as a key pillar.

These different drivers on which the dealership will have to act and make decisions have several challenges associated: 

■ Technology and tools: Find and select a mobility technology partner who can provide a digital, connected, seamless and integrated solution for more demanding customer who proactively and quickly expects solutions (either products or services) adapted to their needs. 

■ Human capacities: Acquire new skills and train own resources. New services that allow the customer to use vehicles in new ways, and from a technological perspective, include great changes in relation to the skills required versus the traditional selling model. 

■ Partnerships: Look for alliances. New business model based on the use of the vehicle and the development of mobility services will require collaboration with different actors inside/ outside the sector.

■ Relationship with the brand: Decide the level of engagement and alignment with the brand mobility strategy. Dealerships could embark on projects independently, without the involvement of the manufacturers and their respective importers or be engaged and aligned with the manufacturer mobility strategy.

Either by aligning with the brand or moving forward with independent project, it is clear that dealers need to be prepare for a deep transformation, from product to services, re training their own staff and looking for best-in- technology providers that guarantee unique customer experiences.

CONCLUSIONS 

1 The car dealership will play a different role. In a near future, the sale of vehicles will not be the main purpose of the car dealership, instead these dealerships will gradually become mobility services centers.

2 The future is digital and what is digital will influence us in all areas of our life and our relationship with others. The automobile and its sales and service channel will not be an exception. 

3 People are key. Technology is a tool, but human beings are the protagonists. Customers are the center of everything that happens and external co-workers and employees are the actors who make decisions and execute the processes to give the customer a better experience. 

4 Information is the new “oil”. Customers want to be given an experience suited to their tastes, preferences, and needs at all times. To this end, information based on data, which must be obtained from very diverse sources and will require advance analysis capabilities to become true quality information, will be needed. 

It is not a milestone of the future. Ready or not, mobility is transforming the Automotive Industry and the dealership role to become Mobility Services Centers. 

GTS is always looking to be the preferred technology mobility partner to delivers world class solutions using our mobility expertise and cutting-edge technology. We have more than 10 years of mobility experience with a range of mobility solutions based on a single platform that supports multiple business channels, products and services creating a unique customer experience across personal and business use.

Sources: Frost & Sullivan. MWC19 Barcelona. NTTData

Writer Guest and Mobility Industry Expert, Gabriel Madero.

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