GearRex -
You should copy+paste this to every car forum in town. THIS is one of, if not THE key reason manufacturers are creating new brands/entities. It will allow them to circumvent the franchise law situation.
Now this is easier said than done and is going to take a long time: the value of brand names is significant, and building a brand takes a significant amount of time and money.
At the lower end / mass end of the market I see this being a bigger deal since profit margins are lower in general, and the value of selling direct makes a lot of sense. For premium vehicles I could see the current franchise model sticking around because of the value of the brand itself.
To your point of turning dealerships into franchise service centers - I can completely see this happening. As automakers reduce incentives to dealers and also reduce margins on cars, the dealers are going to find new car sales far less appealing. Since the majority of profit comes from service anyhow, this seems like a logical fit: dealerships stop having to floor plan cars, they don't need as much land, they don't need as big a building, staff, etc.
Compelling model.
Quote:
Originally Posted by GearRex
Dealerships as we know them, will start thinning down by 2025. Manufacturers are not too happy with the speculative nature of dealer pricing, giving the brands overall an terrible reputation. Latest example is the new Corvettes. COVID simply exacerbated the situation, with dealers making obscene profits with fewer inventory.
However, there are many laws in place that protects the current business model with manufacturers forced to go through Dealers.
Enter electric cars and Tesla. They are allowed to sell direct to consumer and get to keep all the profits. They also control the user experience, and delivery. Most people are extremely happy with this sales process. Suddenly everyone wants the same thing. Where does Tesla fall flat? After sales.
So, how to move forward? For all electric models, manufacturers are creating new legal entities. Financially, they are setting up the Electric brands as different organizations. This will allow them to be just like Tesla, and circumvent current laws.
Manufacturers want it, consumers want it.
Yes, dealerships are not going to completely disappear, instead, they will be incentivized to be Service and Delivery centers. They just have to figure out this last piece of the puzzle.
This is also what BMW wants.
This is a great article:
https://edgy.app/car-dealerships-why...iminating-them |