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Are Car Dealerships on the Way Out?

The next time you go out to purchase a new car, it could be quite a different experience from what you've been used to. Times are changing as new generations of consumers change their lifestyles and priorities and as technology continues to influence the industry.

So, if you're one of those people, as I am, who actually enjoys the experience of visiting your favorite dealerships, test driving new cars and even the challenge of negotiation, those days could soon be gone. But if you're like my grandfather who purchased a new Cadillac ever two years from the same salesman at the same dealership until the day he died, you might still be in luck -- at least for a while.

According to this article in the Wall Street Journal, "small to mid-size dealer groups are selling their businesses to auto-retail giants or investment firms at a robust clip even as auto sales remain strong. The trend—highlighted by Warren Buffett’s entry into the dealership business in 2014—has gathered momentum as electric, shared and autonomous vehicles threaten to reshape the car business."

That worrisome (to me, at least) trend was confirmed by Rick Comfort, a long-time consultant to auto dealerships, who said a variety of factors are influencing the change, ranging from the advent of electric and driverless cars to lifestyle changes.

"Yes, the car biz is changing," Comfort said. "Public groups (Penske, Auto Nation, etc) have pretty much either bought out the small dealerships or forced them to close (like all big box retailers). The service biz is hit or miss, mostly warranty repairs paid by the factory. Customer-pay, is negligible. So, it's go big or go home -- except in luxury cars. "They still have clients, not " customers," who buy from the same sales person for life, and their kids also."

Regarding service, Comfort says the original equipment manufacturers "want huge regional delivery centers and smaller local repair shops. You buy on-line and go to a delivery center to pick it up. You take it to your local repair center for service. It's the same with electrics."

Comfort blames the Millennial generation with its "I want it now" attitude.

"It's going away because of the Millennials -- they don't want to waste time; they shop on the web, and don't care about relationships. Cars are a commodity to them," said Comfort.

"The only thing stopping it (the demise of independent dealerships) now are state franchise laws, but it's going to happen."

I think that's a shame. There's something uniquely American about local business people selling cars to local residents, contributing to the community, participating in community activities and trying to beat you for every last dollar when you go in to buy a car. I'm serious, if that goes away, I'll miss it.

#cardealers #electriccars #Millennials #autonomousvehnicles #RickComfort

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