Those car dealership flags, red tag discounts and lots full of cars waiting for a new home might soon be relics of the North American car dealership industry. In 10 years time the new generation of drivers will take the wheel, but they might not be purchasing new vehicles the way their parents and grandparents did—nope—the millennials (people born between 1980-2000) have always done things a little differently. New car dealerships have been shrinking since 1990 and this questions whether car dealerships be around 10 years from now?
The Carless Generation
First off, driving isn’t as important as it once was. A decade ago before smartphones, social media and other form of technological communication, people had to meet in person to socialize often resulting in travelling from point A to B, but now it’s different. The price of a smartphone and data plan is much more affordable than buying a new car. And there is a steady decline in young drivers, from 1983-2008 in Canada, with ownership of drivers licenses dropping by approximately 20%.
Owning a car is no longer a priority for the younger generation. High prices in fuel, maintenance, insurance and even parking, is causing drivers to think twice before opening up their wallets. The cost-conscious generation-Y are finding alternatives to car ownership. Renting-based options are becoming more and more popular with the advent of such startups as Car2Go, Zipcar and Uber.
Indicators of Changes to Come
In addition, there is now a lot of information on every subject matter and that means young drivers seeking to purchase a new car are more informed than ever. A simple click on the Internet and curious consumers can explore any vehicle known to man and where they can find them and how much they should pay for it. You can even negotiate for a new car without visiting one dealership. Will this growing access to new information in the car buying process lead to eliminating the role and expertise of the car dealer?
One thing is certain; haggling for the best deal is becoming less and less relevant everyday. Manufactures recognize this new “no negotiation” mentality and are choosing to sell directly to the customers—skipping the middleman—that was not possible a few years ago. General Motors is leading the way by developing software (called Shop-Click-Drive) that will allow customers to shop for their new car online.
With large industry players moving toward automating the car buying process so you can shop at home and avoid dealerships, could it mean that 10 years from now dealerships will no longer exist? There is always a possibility as we have seen companies like Airbnb take big bites out of the hospitality industry and Uber take over the global market in taxi services. Although there aren’t any signs of decline in dealerships across Canada or the states – this can be an early signal that manufacturers are trying to cut out the car salesperson based on future car buying trends.
True Value of Dealerships
Even on forums like Quora, people ask with all the technology out there why do dealerships still exist? Many have negative experiences associated with the car buying process, especially dealing with salesman at your local dealerships. That being said, dealerships aren’t the money grabbing leaches we always make them out to be.
They are simply a business intent on helping you find the best product. We have worked with amazing dealers who go beyond just getting you the best price for your new car by fielding constant questions before and after you buy your car.
At the end of the day, these dealerships offer expert advice and human connection – an irreplaceable commodity. An accountable dealer may help you in the long run should you have any questions and they also nurture you when you’re researching what car you want. Despite it all, it is still better to talk to a person face-to-face because you’re putting a lot of time and money behind this decision.
Uphill Battle They Have to Face
But the modern world is powered by convenience and as more and more manufacturers decide to transition to the virtual show room, dealerships might need to re-strategize or become obsolete. Therefore, they need to do a little prediction and reality check, while acknowledging the trends of the industry.
The automobile market has been incredibly resilient the past few years, even through turmoil and recession. Most believe that it will survive the next financial ice age—but dealerships might not be as adaptive or appealing to the maturing millennial generation.
Driving is becoming less and less cool. As cities expand, driving becomes more of a chore than a luxury. Millennials see this as a fact and have developed a habitual life where cars are less relevant to how they live. They are simply seeing other options that the older generations rarely consider.
The marketplace is changing and the younger generation is growing up. How will they behave in 10 years is still to be determined. Although they might have their youthful vibrance and optimism now—what will happen when they decide to move out to the suburbs, get married and start a family? How will their driving habits change then and will they still find a day off, enter a showroom and shake hands with a salesman? Or will the car and the salesman arrive at their doorsteps?
If only the dealership sold DeLoreans, then I can go find out for you—but alas.
