What is the biggest threat facing down your dealership in the coming years? Pressure from original equipment manufacturers (OEMs) to make decisions regarding your online presence that may be suboptimal? Increased competition from others in your local market? Or perhaps walking that tightrope that comes with balancing traditional sales with growth in your service department is the answer?
While all of these concerns definitely merit a place in the discussion, a recent report from Lux Research points to a far greater existential threat as the issue that deserves the bulk of your attention in the coming years. The threat in question? Future projections that point to the decline of traditional car ownership in the wake of ride-hailing and vehicle-sharing services.
Sharing Is Scaring: Findings from the Report
As the team behind this industry breakdown explains, the average person's reliance on owning a vehicle has created one of the largest industries in the world with a market cap easily breaking into the multitrillion-dollar mark. However, as this relationship changes thanks to the rise of autonomous technologies, digital connectivity, and electric/hybrid options that make ride-sharing and transportation-as-a-service (TaaS) economically viable alternatives, it is only natural for the power and influence of Didi, Lyft, Uber, and Grab to balloon and supplant a large portion of the market once dominated by dealerships like your own.
Going a step further, the attractiveness of this new "Shared Mobility 2.0" platform as named by the Lux Research team has invited outsiders to invade the marketplace and often forge alliances with automakers who would rather not be left behind in this shifting landscape – even if that means working directly against the interests of dealerships and other organizations partnered with these OEMs.
(We've covered this phenomenon in great detail in the past, from Ford and Alibaba's automated "car vending machine" to Chrysler partnering with Google's Waymo to create a fleet of autonomous Pacificas.)
All told, the findings of this report point to a future built around three key takeaways:
- Automaker Consolidation and Partnership – Mergers between OEMs and expanded partnerships with industry interlopers will continue to become commonplace as automakers increase investment in mobility services and TaaS overall.
- Public Transit as a Significant Differentiator – Partnerships between cities, OEMs, and tech giants will also play a significant role, leading to expanded joint ventures and more pressure on traditional auto sales.
- No Clear-Cut Winner – While the industry is definitely going to be remade in a new image, that doesn't mean that traditional dealerships don't have a place in this future. Shared mobility and similar services aren't right for every city or market, so no single transportation solution will reign supreme above the others.
What Does It All Mean for Your Dealership?
So what does all of this mean for your dealership? Naturally, it is far too early to make a concrete statement on the matter. However, for the dealerships that plan to weather this storm and continue to carve out a viable path forward as the demand for new and used vehicles potentially declines in the near future, staying abreast of these trends – and formulating a plan that anticipates the impact of these industry shifts – is essential.
Want to read the full report from the Lux Research team for yourself? Then set aside a few minutes to dive into the report, "Sharing is Scaring: New Business Models Disrupting Mobility." You can also check out a brief summary below via the official press release from the Lux Research team.