Three things all dealers need to know about the future of the automotive industry
Technology caused a rapid change in the automotive industry in recent years. Ride-sharing and self-driving cars in particular has caused a major shift in how people view cars and car ownership. While many predict that car dealerships as we know it today will become obsolete, the future holds many opportunities for dealers who keep their fingers on the pulse of technology.
Here are three things forward-thinking dealers need to know about the future of the car industry.
Maintenance will become predictive
When you take your car for a service every 10,000 miles or so, you hope that the garage or shop will pick up any problems that might have crept in along the way, and also warn you about things like your car’s brake pads that will need replacing soon. While computerized diagnostics systems already exist today, there are limitations — they can pick up problems, but not predict potential future problems. It’s still largely up to the technicians to spot signs of problems to come.
All that is busy changing. More and more manufacturers and third parties are developing sophisticated tools and software that can proactively warn you of a potential problem before it even becomes a problem. These diagnostics systems take the guesswork out of vehicle maintenance, and helps vehicle owners to keep their cars in peak condition at all times.
These diagnostic systems allow dealers to give better customer service. Since they know the number of vehicles expected each day, they can manage their technicians and workshops better, and service and repair cars quicker. They also know in advance what type of problems a certain customer might have, which enables them to be prepared when the customer brings their car in for repairs.
This is also great news for fleet owners, who can monitor the health and performance of their fleet, and reduce cost of repairs through proactive maintenance. Not only will this result in more uptime, it will also extend the life of the fleet.
Fewer people will own cars
Owning a car is a rite of passage into adulthood. It is the ultimate symbol of independence, and many young people dream about the day that they “have their own set of wheels”. Owning a car allows them the freedom to go wherever they want, whenever they want. It gives them the mobility to get to work, running errands, and going out over the weekend — a car is an important part of people’s lives.
With the increase in popularity of services like Uber and Lyft, having a car is becoming less and less important. These services provide mobility on-demand — you can go wherever you want, whenever you want at the tap of an app on your smartphone, it’s turning mobility into a service. For cash-strapped newer generations the idea of mobility as a service (MaaS) means that they don’t have to fork out large amounts of money on payments and maintenance.
This does not necessarily mean car ownership will decline, it will simply shift. According to research, Millennials (those born between 1980 and 2000) are financially worse off than the previous generations of Baby Boomers and Gen-Xers. Stagnant incomes and a challenging economic environment, has made it more difficult for these 20 to 30 year olds to afford cars, leading them to embrace concepts such as MaaS. This does not spell doom and gloom for dealerships, as Millennials still want to own cars, they just buy them later.
In the same breath, the transportation environment is definitely changing, and future generations might put car ownership at the bottom of their priority lists. For dealerships to survive they will shift their approach, and see MaaS as an opportunity.
Dealerships will become MaaS hubs
Many predict that the days of the dealership franchise is numbered. Consumers will be able to buy directly from factories, showrooms will move to malls, and ride-sharing and autonomous vehicles will make dealerships obsolete, or will it?
It’s no secret that dealerships make more money servicing cars, than they do selling new ones. This is because a new car may be a big once-off cash-injection, but servicing that vehicle is an ongoing revenue stream. This is arguably the greatest opportunity for dealerships in the MaaS environment. MaaS still relies on cars, and cars, even autonomous vehicles, need to be serviced. In fact, maintaining these fleets will become increasingly important, as any downtime may result in a loss of revenue for MaaS providers.
Dealerships with predictive maintenance systems will be well positioned to partner with providers to ensure their fleet is properly maintained and operating at peak performance. They will become a critical part of the MaaS provider’s operation, and ensure constant, long-term revenue for the dealership.
To an outside observer it might seem like recent technological advancements will soon sound the death knell for traditional car dealers. While this may be true for some, savvy dealers will recognise opportunities in this changing environment and evolve to be able to advantage of these opportunities.