It may not seem so right now, but in a few years, when the U.S. auto industry reflects on 2020, it’s likely to be as an inflection point for whole swaths of a massive and multilayered industry that largely did things one way before 2020 and another way after.
The innovations uncorked to keep people working and keep this industry moving forward amid an era of a pandemic, civil unrest and financial uncertainty have been inspiring.
A year ago, the notion that large numbers of consumers would purchase new vehicles without setting foot in a showroom would have seemed divorced from reality. Now it’s a significant fraction of U.S. retail sales and growing, because it’s what a lot of consumers want.
Consider what dealerships could look like if the majority of consumers purchased vehicles online and had them delivered. Do franchised auto dealerships need to be multimillion-dollar palaces if consumers only ever “visit” them online?
Wholesale auction sites weren’t necessarily saddled with expensive requirements for tile and other decor, but there will be savings and potentially more robust markets with the shift toward digital lanes. Online auctions have been around for decades, but they gained ground in the lockdown — and are unlikely to give it up.
And as more mainstream-brand dealers offer pickup and drop-off to service department customers — as exotic and some luxury brands have long done — it elevates that customer relationship and opens opportunities.
These and other innovations brought forth to get through 2020 will result in permanent changes in this industry and throughout the broader economy.
One thing is certain: The days when a franchised dealer competed only with the dealer down the street or even in the same town are likely done. As auto sales transition to a digital world, geographic boundaries will also fall, and dealers’ territory will be defined primarily by how far they are willing to travel to deliver. That is likely to hinder profitability over the long term as added competition weighs on margins, but aggressive dealers will be rewarded with added volume.
As is the case in any upheaval, winners will emerge, and others won’t survive. The transition, however, will make for a stronger industry overall, and that is something to which we can all look forward.