Data and financial services represent two potential areas of growth for dealers over the next decade, while the direct-to-consumer sales model, quick market shifts, and labour shortages are some of the anticipated challenges.
That is according to a Reuters Events report: The Dealer of the Future, which was authored by Susan Kuchinskas and produced in conjunction with SAP. In it, they indicated that there is a “strong opportunity” for dealers to leverage data so they can further personalize the guest experience.
“But problems of data ownership, data sharing, privacy and security need to be resolved,” the report notes.
On the financial services front, the report points to the importance of improving the integration of pre-approvals, loans, and insurance with the digital buying process. This in turn can help dealers stay competitive with other financing platforms. According to the report, “OEMs want to extend their reach here, as well. Even so, dealers will still be the integration hub.”
As for potential challenges, the heavy market shift towards digital that occurred during the pandemic is expected to continue. And although there are many consumers that will still want to see the vehicle in-person, an evolving digital presence will be necessary.
“Because there are fewer vehicles actually being sold off the lot, the showroom has less of an impact. At the same time, there’s a greater emphasis on digital showrooming,” said Bill Newman, Executive Industry Advisor of Automotive for the North American Industry Customer Advisory at SAP, in the report. Moving forward, “you’re not going to see huge parking lots full of vehicles,” he added.
The labour shortage is also expected to impact dealers to a greater degree, along with the transition to electric vehicles and the OEM direct-to-consumer vehicle sales model. The shift to EVs will pose challenges for the physical showroom, sales staff, repair technicians, and business processes. And dealers will need to further strengthen their customer relationships to help offset any OEM direct-to-consumer issues.
“The big threat I see is car manufacturers that are carving out EVs from their original franchise agreements,” said Max Zanan, auto industry consultant and author, in the report. You can download the full report here.
