THE AADA MACQUARIE GENERAL SESSION: GLENN MERCER PRESENTS “THE DEALERSHIP OF TOMORROW”
With three decades of Automotive Industry experience, independent analyst Glenn Mercer was commissioned by NADA in 2015 to undertake the Dealership of Tomorrow (DOT) project.
The purpose of the project was to stimulate long-term planning among US Dealers. In late 2015, when the project was commissioned, the USA had just completed half a dozen years of steady sales growth, which the industry could not have hoped for back in the depths of the global financial crisis that caused a recession in the USA.
Glenn’s report was intended as a tool for Dealers to use in planning for the future, by providing a series of ten-year forecasts of trends important to Dealers. Whether the forecasts come true or not is an important, but secondary consideration; the main point was to stimulate active discussion about the future, among Dealers.
The scope of the report includes both “inside the industry”, such as the rate of consolidation of store ownership and the direction of overall profitability, and “outside the industry” developments such as the future growth of EVs (electric vehicles), AVs (autonomous vehicles), MS (mobility services such as Lyft), and CC (connected cars).
The overall finding was that over the next decade, the average USA franchised new-car Dealer will see many changes, but no significant disruption to the underlying business model: evolution, not revolution.
That being said, the changes will be significant: for example, a consolidation of ownership, an increasing shift of the centre of gravity of profitability to fixed operations, a probably lower level of overall profitability, and an increasingly dominant role being played by Information Technology. And in terms of the “outside” trends, we see an accelerating penetration of EVs (probably quite manageable by Dealers), and of AVs (which will probably benefit Dealers), and CC (which definitely will, if only on a modest scale). But MS poses a significant risk, in that if car-share replaces car-own, Dealers could see a massive shock to the system.
Glenn will show that more than two years after his report was released, its predictions are mainly on track.
There are some adjustments to be made: EVs are gaining ground perhaps more rapidly than expected, to name one. But generally the theme of “evolution rather than revolution” is intact.
Whether the business is as interesting and entrepreneurial in 2025 as in 2015 or 1995 is doubtful: in some ways NADA’s members are becoming retailers rather than Dealers, with less control over their destiny than in the past – a situation Australian Dealers are familiar with. Yet the outlook remains generally upbeat, as long as Dealers keep a sharp eye out for the some of the threats that may develop.
Many of the issues confronting U.S. Dealers are the same or similar to those faced by Australian Dealers. Glenn will use his expertise to translate the findings of his U.S. study to the Australian market.
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