Pub. 58 2017-2018 Issue 1

30 The Dealership of Tomorrow: Context of This Report Introduction This project was conceived when NADA senior staff (notably Mike Regan andBertHulgrave) became concerned that dealermembers of NADAwere often not as informed as they probably should be, about the various changes that are occurring in the automotive retailing industry in the United States. Understandably focused on the day- to-day realities of managing the complex business that is a modern car dealership, they had little time to think about the longer-term impact of these changes on their stores.This was in part due to infor- mation overload: for example, not a day goes by in America recently without an announcement of some new investment in ridesharing. And there was also the problem of hype: some of the more extreme claims about the benefits of driverless cars, for example, seemto place them on the same lofty pedestal with the invention of electric light or the discovery of penicillin, causing skepticism among many. This report, therefore, aims to winnow through the vast mountains of data available, in order to within them find the most valuable pieces of information (while discarding the most breathless expressions of hype), and to convert the insights discovered into wisdom a dealer principal can actually use in her or his long-term planning process. Scope Below are the parameters that shape this report, so the reader will understand better what to expect. • TIME: Our focus is on roughly the next decade, so our predic- tions are for the dealership of 2025. • BUSINESS: We are looking only at franchised new-vehicle stores (not independent used-only shops), and only at light-duty dealerships (not heavy-duty truck stores). That being said, we have a chapter discussing lessons learned from truck stores, which may be useful for car stores. • GEOGRAPHY:Our focus is on theUSAonly.However, we have chapters on insights from Europe and China, as we realize that we live in a globalized world, where individual countries cannot ignore developments outside their own borders. Because of this geographic focus, readers should not extrapolate fromour findings to globally-valid conclusions.Thus, for example, the development of rideshare may be wildly different in China versus America. • FORECAST: We are providing a single forecast, not generating a range of scenarios. We understand that looking at multiple sce- narios has great appeal generally, but we think that this approach is unhelpful to dealers specifically. Dealers already have a very full plate of tasks to be done, such that handing them a set of “it could be this but it might be that” scenarios would just overload that plate. We have chosen instead to focus on one forecast – and then discuss what might cause it to come out differently. • OUTPUT: In every case we have tried to link our forecast to specific implications for dealers, and in some case specific actions they might take. Too many reports we have read in this field deliver unhelpful generalities (e.g. “get closer to the customer”), so we have tried to deliver actionable recommendations (e.g. “open a satellite service facility”). Disclaimers We have three important disclaimers to make. 1.While this report was commissioned by NADA, on behalf of its members, this report is not an NADA position paper. The views and opinions expressed in this report are those of the author’s sources, as interpreted by the author, and accordingly in various cases do not align with NADA’s own views or perspec- tives. The goal of the report is to project the most likely future dealers might face – not the future that dealers might want to face. The author attests that NADA personnel, beyond specifying the general scope of the report (e.g. a ten-year time horizon, a focus on car rather than truck dealers, a request to take a close look at the issues facing small rural dealers, etc.), made no substantive changes to any of the content of the report. There were only two exceptions to this general rule of complete editorial independence. 2. First, the author did consult NADAattorneys for their reviewof any comments made on the legal and regulatory environment, as the author is not an attorney, and did not want errors of interpretation of laws or regulations to undermine his arguments in this area. • And second, we turned to the experts at ICDP 1 for much of the material in the Europe and China chapters, such that there the author’s opinions are subordinate to theirs. • “Yourmileagemayvary:” don’t take this report as the authoritative answer, but as input to your own forecast, tailored to your store’s circumstances. Use your own judgment. Our industry has a long track record of forecasts made that have been wide of the mark: • A survey of industry participants published in Automotive News in 1993 asserted that by now customers would order cars via interactive TV sets, that the physical test drive would be replaced by drives executed in virtual reality, that dealer- ships would mostly be multi-branded, and that stores would be holding only a few demonstrator models rather than large inventories, because customers would custom-order cars that would be built and delivered within a week. • A Ward’s article in 1990 predicted that by 2003 customers would be viewing 3-D holograms of cars in showrooms, as much as physical cars themselves. • A famous industry expert—who will remain nameless—in 1989 forecast that, before the year 2000, OEMs would be fighting for “shelf space” at multibrand car dealers, just as electronics manufacturers do for display space at (e.g.) Best Buy. • As shown in a footnote to this report later on, an esteemed OEM leader years ago projected that long before now only 20% of dealerships would still be in private hands. The point here is not to mock forecasters from the past (hindsight is after all 20/20), but to remind us all that the future of this in- dustry has never been very easy to see. So take what you read here as input rather than as output, and arrive at your own forecast.  DEALERSHIP OF TOMORROW — CONTINUED FROM PAGE 28 1 The International Car Distribution Programme