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A Change in the Automotive Retail Paradigm

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A Change in the Automotive Retail Paradigm

Significant changes are underway as automotive manufacturers and retailers try to anticipate consumer demands in changes in their business models.

Traditional Sales, Leasing and Service are now complicated by subscription services like cars2go by Mercedes-Benz, incremental ownership models and the impending autonomous driving car. Outside influences of driver services such as Uber and Lyft also are challenging the notion of car ownership as a basic need.

At the core of all these new business models are efforts to bring more convenience to the buyer, making the process virtual while requiring less capital investment and operational cost for businesses attached to the car.

A Carvana type model seeks to change the process to a fully automated online experience, which reduces operational cost to sell, perform the finance process and service the vehicle, while also decreasing capital expenses of building and developing large buildings. The doorstep delivery model means these vertical dealerships simply house the cars that have already been selected online, omitting the conventional sales and financing process all together.

The equation simply becomes an algorithm of how many and what type of cars are stored in which locations based on aggregating search patterns and general income factors. This new model means the inventory is distributed to the nearest & the most likely buyers depending on age, buying patterns and income.

It will be critical how the manufacturers maintain their brand equity without relying on a compelling retail space, or human sales associates as brand messengers.

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(Source: bdcnetwork.com) Posted – April 27th, 2017