According to a recent survey by the National Automobile Dealers Association, an overwhelming majority of consumers – 89 percent to be exact – prefer to own their own car rather than rely completely on ride-sharing firms such as Lyft and Uber to get around.
Even among Millennials, 81% prefer to not have to exclusively rely on ride-sharing, the survey found. So, urges NADA president Peter Welch, stand up against any legislation coming out of Washington that endangers the individual’s right to own a car – or to buy it at a dealership. Car ownership is, he says, “as American as apple pie.”
Is apple pie on the way out as a popular dessert? Because car ownership is, according to Bob Lutz. Lutz, ever the contrarian, has in recent columns and speeches sounded the death knell for dealerships. He predicts a future filled with bland, pod-like self-driving vehicles owned by fleet operators such as – wait for it – Uber and Lyft. The dealership model will be gone in a couple of decades, he says.
I think the reality will be somewhere in the middle. NADA may be correct that there will always be a market for private car ownership. But it is easy to say you prefer to own a car rather than rely on a ride-sharing service. And we don’t know what new business models and vehicle technology will develop in the coming years. It might become so easy to hail a ride that most of us do prefer that mode.
As for dealerships, that business model is already changing with the advent of subscription services such as Care by Volvo and alternatives to ownership offered by companies such as Fair. But those cars will always need servicing. And the OEMs will want to hold on to as much of the value chain as they can. Working with dealerships to sell and/or manage those vehicles may turn out to be a way forward.
One thing is for sure, the industry will change. And a resistance to change is one theme in this week’s profile of Wholesale Auto Supply Co.’s CEO Andrea Karsian. WASCO is like a Costco for dealerships – but it has been around longer. Karsian tells ABSR how the business model works and how dealerships benefit from it. The biggest barrier to growth for WASCO, she says, is resistance to change.
As I’m sure you all know, its tax season. And just in case you needed reminding, this week we have a column from Crowe Horwath looking at the benefits of a C-corp structure for dealerships under the new tax law. Okay, we’ve addressed this before. But not everyone reads every column, and its always good to look at these matters with a fresh set of eyes.
And, Transaction News!