Dealerships are facing a major crisis that could be insurmountable for many. They're about to weather a storm of challenges, including high prices, job cuts, and a growing mistrust among consumers. Investing in dealerships now seems risky due to a range of factors: rising interest rates, mass layoffs, increasing vehicle costs, decreasing wages, chip shortages, ongoing conflicts, the rise of electric vehicles, soaring food prices, banks tightening loan approvals for new cars, and escalating gas prices.
Each of these issues on its own could significantly reduce new car sales, shifting demand toward used cars, parts sales, and service work.
Forcing dealerships to dealerships to rethink how they make money.
It's going to be a battle to survive and most of them won’t!
Because manufacturers are buying and assembling pieces you can see exactly how much extra they are adding into the price of the car, but the dealerships pricing structure is not so visible and while US laws prevent car manufacturers from selling directly to the consumer, Tesla has found ways around those laws.
And to compete other manufacturers will have to do the same, you can already buy motorcycles directly from Amazon, so how long before you can buy your car on Amazon as well?
A lot of people believe dealerships should have never been given exclusive rights to sell new cars. They believe if car companies want to sell to people directly, they should be able to. It's not something the government needs to control.
When cars get old or need fixing, people spend money on parts and services to keep them running. But because more people are choosing used cars and electric cars, the money spent on fixing and maintaining them is changing.
Electric cars need less fixing.
And now you’ve got governments passing laws to make it illegal to fix your old cars.
When it comes to Online vs Offline, Online seems to win time and again.
- Netflix made people stop going to video stores.
- Uber changed how we use taxis.
- Apple changed how we listen to music.
- Amazon changed how we shop in stores.
- Airbnb changed how we find places to stay.
- Zillow changed how we find houses.
The online world is better because it's easier. It removes the friction that slows us down, like going to a store or searching for a product.
For example, Netflix is like a movie store on the internet. You don't need to:
- Go outside.
- Look through lots of movies.
- Check the time, because it's open all the time.
- Ask someone for help, because a computer helps you find movies.
- Worry about late fees.
People Love Easy:
People like things that make life simpler! But some car stores still want you to come to them, even if it's not that easy.
Good Websites Matter:
If a dealership were trying to do things that made them better than other stores they might have a chance, but they don't.