Pub. 1 2012-2013 Issue 1

N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S 27 new jersey auto retailer W W W . N J C A R . O R G We’ll touch on a few items in this article, but we encourage you to also read the article on page 14 written by George Berry, Jr. entitled “Strategic Vision of Dealerships in 2025” for an in-depth look at what the industry might look like a decade from now. Looking back at the accuracy of some predictionsmade 15-20 years in the past, take the following with the proverbial grain of salt. The Death Knell of the Combustion Engine Garry Golden, a professional futurist who has consulted on a wide range of projects related to the future of transportation, predicts that the electric vehicle will eventually spell the end of the combustion engine platform, although that time is likely far, far in the future. The rate of innovation in the development of EV technology is much faster than the pace of consumers embracing the new technologies. Advances in materials design will continue to lead to breakthroughs in energy systems (batteries and fuel cells) and materials that will allow for light weight vehicle bodies that reduce costs and simplify assembly, while improving safety. Mr. Golden predicts that the technologi- cal advances in engine design might lead to the creation of smaller, low-volume manufacturers in the future. Would You Like A Software App With That? Mr. Golden also predicts a slow shift in the market from new car sales toward the sale of a basic platform with a variety of aftermarket vehicle upgrades. Howmuch of this would be driven by manufacturers and how much by retailers remains to be seen. Vehicles made in 2012 have more computer components than ever before and manufacturers have begun integrating other software applications into their design, including GPS, mobile calling, social media and more. The entire auto industry, from manufacturers to suppliers to dealers, can expand revenues if the industry continues to evolve from a one-time new car sale to the purchase of a base platform that can have on-going after-market upgrades and personalized software experiences tailored to each individual buyer. Traditional Auto Retailers Will Face Challenges On Multiple Fronts The Global Dealership Survey, conducted by KPMG, predicts that large automotive retailers, including dealership chains and mega-dealers, will control a greater and greater amount of the total marketplace in the years ahead. Nationally, online “retailers,” in one form or another, may gain a bit of market share in the future. This will not be an issue in New Jersey due to the protections of the Franchise Practices Act AND strict licensing requirements of both the New JerseyMotor Vehicle Commission (NJMVC)and the New Jersey Department of Bank- ing and Insurance (DOBI). Traditional retailers will utilize many of the same benefits provided by the Internet and other digital marketing resources to both retain customers and deliver service. The auto purchasing process is likely to change as well. Brand loyalty is quickly becoming a thing of the past. Dealers will need to continue providing new and better services to their customers in an effort to distinguish themselves from their competition. As cars last longer, the focus will shift from selling more cars to providing a wide array of other profit- able services. Used vehicle sales will continue to grow in importance and dealers will need to be less passive and more proactive in their approach to used vehicle acquisi- tion and sales. Consolidation is expected to continue over the long-term, resulting in the potential closure of many single-brand dealerships. In some instances manufacturers will drive consolida- tion as they decide which dealers to support and which to let go in an effort to shape a network consisting of fewer dealers that are larger than the average dealer today. In other instances, competition and customer demands will drive the consolidation. As customers continue to find more information online regarding how much a dealer paid for a car, how they treat customers, the level of after- sale service provided and more, consumers will gravitate to the “best” dealers. Change is inevitable. Some run from it and others embrace it. The franchised retail automotive industry has made quantum leaps in the last 100 years. Nobody can know exactly what the future holds, but it is important that dealers keep an eye on both the short-and long-term trends in the industry so they are best situated to utilize any technological advancements to meet their customers’ evolving needs. Vehicles made in 2012 have more computer components than ever before and have begun integrating other software applications into their design looking back to look ahead  continued from page 25