Pub. 58 2017-2018 Issue 2

34 public could tell the difference anyway, as discussed: does a coffee drinker realize that stand-alone Starbuck’s are company-owned, while those inside a Target store are run by Target? We have already mentioned how dealers can emulate pseudo-direct or “dealer- less” sales channels: they can certainly do more, if customers ask for this. As further input on this topic, we asked leading automotive analyst Co- linLangan, at UBS, to include a ques- tion about direct sales in his monthly survey of US dealers. (You’ll see more results from this survey throughout our report. 38 )Here’s the result, collect- ed from several dozen dealers, to the question “What percentage of new-car sales will be ‘direct’ in 2025?” You can see that these survey respondents did not see much growth for direct sales, with an average penetration in that year of perhaps 3%... which is still higher than today, of course. Taking all this into account, therefore, we expect the independent franchised dealershipmodel to remain very domi- nant through 2025, for very sound economic reasons. However, we also expect factory-direct models to gain some ground, especially inhigh-priced vehicles, perhaps to a market share in the low single digits. But then, if they gain enough ground to threaten the current dealership system, we see it adapting – as it always has 39 – to emu- late and compete with the more suc- cessful aspects of the direct approach. 38 “UBS August 2016 Dealer Survey,” UBS Securities LLC. Source: UBS Dealer Survey 5 065Westheimer Road , Suite 1100 , Houston, TX 77056 www.cdi-douglass-pye.com William S. Pye, AIA, NCARB bsp@cdi-douglass-pye.com DOUGLASS  PYE, INC. Architecture  Interiors  Planning All your Automotive Architectural and Interior Needs 38 “UBS August 2016 Dealer Survey,” UBS Securities LLC. 39 Note how independent dealers have deflected or absorbed earlier threats to their existence: beating back factory-direct experiments in the USA (by GM, Ford, and Daewoo, to name three), refusing to be swept from the board by the public dealer chains, and defeating the attacks of the internet- enabled “disintermediators” (all of whom either exited, converted to lead generators, or now act as quasi-broker/advertisers).  DEALERSHIP OF TOMORROW — CONTINUED ON PAGE 36