Pub. 16 2017-2018 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 23 new jersey auto retailer W W W . N J C A R . O R G and made electric cars. But those products had fewer working parts than those pow- ered by internal combustion engines. And software updates and improvements were done directly over-the-air. Consequently, repairs and maintenance, like oil changes, were reduced, if not eliminated, and repair orders shrunk. With virtually no upfront gross, and slimmer profits in the service business, dealers saw their bottom line further deteriorate. At the same time, dealerships, particularly in more densely-populated areas, began to teeter altogether. Retail vehicle sales dropped precipitously. Vehicle ownership was dismissed by a new breed of consumer. The call of the open road and rumble of powerful Hemi V8’s fell on deaf ears. In- stead, they dwelled on the hassle of traffic jams and frustration of finding parking spaces six blocks from their destinations, if they could find one at all. They shunned insurance costs, lease payments (or depre- ciation) and maintenance. Instead they cherished the convenience and affordability of ride-sharing services. My dream progressed. More dealerships began to close as the demand for 16 million new cars was further chopped. Self-driving cars became prolific, eliminating the need for families to own two cars. They deliv- ered their owners directly to their jobs all while they watched TV, slept or worked on their lap tops. Then the vehicle picked up a non-licensed, disabled grandparent and took them to their doctor’s appointment. Additionally, that same car was later rent- ed out to somebody else thanks to a new Mobile app, which subsidized the vehicle’s cost. There was less concern about colli- sion damage since insurance was now the responsibility of the manufacturer. That one car took the place of two cars since its utilization was much higher than the 4 percent of today’s personally-owned vehi- cle. The result was many fewer cars being sold to private owners and the inevitable shrinking dealer body. If possible, it got worse. Apple stores reined where car dealerships, only a few years before, ruled supreme. True, safety technology foreshadowed the dealerships’ demise, but ultimately it came down to economics. The average family saved four or five thousand dollars yearly by using autonomously-driven, ride-sharing services in lieu of personal car ownership. It was all about asset utilization. Car fleets were manufactured and/or owned by Amazon. They were rented or leased on an as-needed or subscription basis. They were used 50 percent of the time, so even if they were more expensive to manufacturer and man- age, their use was nicely profitable. The car dealer was cut out entirely, leading to its demise. But then I woke up... It was just a bad dream. The awake me is confident that any changes in automotive retailing will be evolutionary, not immediate OR sweeping. There are too many obstacles (technological, political, cultural, infrastructure, insurance, etc…) for my nightmare scenario to play out. Car dealers are far less susceptible to MY NIGHTMARE  continued on page 26