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6 Key Trends for Automotive Dealers to Embrace

Pam Cichoke

Last month, I had the opportunity to attend the National Automobile Dealers Association convention in New Orleans as a guest of CDK Global. This year marked the 100th anniversary of the event.

I’ve seen this show evolve a lot even over the last three years. Ridesharing has taken off, self-driving cars have become a when, not if, proposition, and virtual reality is heading for the mainstream. All of those are reshaping the industry. For those willing to embrace change, the opportunity is there.

Car hologram being projected by new technology on a smartphone
Created by Ryan Mason

If this year’s show is any indication, auto dealers are getting ready. After years of dealership closings and consolidations earlier in the decade, the industry is looking straight ahead to the future to meet these changes and the needs of the new generation of car buyers.

If you missed the show, here are six key trends to keep in mind:

  1. Fewer bricks, more clicks

    I bought a car last month, and I spent six hours in the showroom. That kind of all-day experience is going to go away. Buyers are already doing a lot of their legwork online, but we’re moving beyond shopping and price comparison. Buyers may soon do some test driving using virtual reality. They’ll be able to play with all the different feature options and start configuring their dream car in the comfort of their home.

    They’re still going to have to go into the dealership and test drive a similar car, maybe a base model. But after the test drive, they could go to a connected kiosk in the dealership, give their creation a few tweaks and order it up.

    The process will be much faster for buyers, and dealers will be able to carry far less inventory. They won’t need as much land, and they can cut way down on “lot rot,” a condition said to affect some 3.9 million vehicles nationwide.

  2. Faster changing demographics

    The concept of “generational compression” was introduced to me by The Future Hunters, who were also guests of CDK and gave several presentations at the show.

    The general idea is that as the industry looks to younger consumers, we’ll no longer be grouping their generations by decades, but by the kind of technology they’ve grown up with. These generations could span as few as two or three years because technology is changing so rapidly. Car makers and dealers will have to be nimble to respond to the wants and needs of each new wave.

  3. The rise of the Cybrids

    Cybrids are the up and coming generation, and they differ from digital natives because they have a symbiotic relationship with technology. By 2020, Cybrids are expected to make up 40% of consumers in the US, Europe, and BRIC countries.

    Cybrids are much more prudent from a financial standpoint. They’re much more concerned about the environment and eager to build a better planet. They’re less interested in owning things and more interested in the time/value proposition of what they consume.

  4. Collaborative consumption

    While the industry may previously have seen ridesharing as a threat, now it's working on a variety of ways to embrace it. The losses concerning car sales probably aren’t going to be as drastic as people initially thought, because people who are driving for ridesharing services are driving those cars into the ground, so they’ll be replaced more frequently. That’s creating new and distinct buying audiences—the professional driver and a more occasional driver who cuts down on their driving by using ridesharing.

  5. Fractional ownership

    According to The Future Hunters, the average car sits unused for 94% of its life. All kinds of schemes are emerging to use cars more efficiently. Unlike Zipcar, which lets members access multiple cars located around town, multi-person leasing involves just one car, with multiple people sharing its use.

    These kinds of services could appeal to people who live in urban areas who rarely need to drive, but also to people who can’t afford car ownership. For example, it may appeal to recent college graduates who are struggling to save money to move out of their parents’ homes but don’t have credit established or enough money for a down payment.

  6. Driverless cars

    There’s a lot of excitement about this, although I don’t think it’s at all clear what it’s going to look like and how long it’s going to take. Manufacturers have made great strides with the technology, but from a safety standpoint, there are still many things that are going to have to be done for the public to trust this type of an apparatus.

    I do believe that because we are such a multitasking people, people will want driverless cars because they may provide a place where you can do things during the time that would have otherwise been wasted. Many of the prototypes on display are envisioning exactly these kinds of scenarios--a sort of rolling environment that might be set up in a variety of ways for business or pleasure.

It’s going to be interesting to see how this evolves and what catches on. The big shift is that we are going to be looking at the features of the car based more on the needs of the passenger, and less on the needs of the driver.

Times are changing, but as long as owners of dealerships and makers of cars are willing to change too, I don’t think it’s going to be a bad thing. I think the best thing that dealers can do now is listen to and learn from the younger generation and try to see the future through their eyes.