Will dealerships disappear?

Hello! Today, we’re talking about dealerships and whether they’ll disappear, but first!

I want to apologize for the broken links in the previous newsletter. We had synching issues and failed to set up the newsletter properly.

Plus, the podcast is coming back next week!

Sincerely, Bernard.

Key Takeaways

Don’t have much time? Here’s the summary of what we’re talking about:

• Dealerships Under Pressure: The rise of virtual dealerships and car subscriptions is challenging the traditional dealership model, but legal protections keep them secure, for now.

• Dealerships’ Long-Standing Power: Laws heavily favor dealerships, preventing automakers from direct sales to consumers, reinforcing dealerships’ influence on car buying and service.

• EVs and Direct Sales: Newer brands like Tesla, Rivian, and Lucid focus on direct-to-consumer (DTC) sales, reflecting a shift as EVs disrupt traditional car buying.

• No-Haggle Trend Grows: Some dealerships now offer no-haggle pricing, aligning with consumer preferences and the broader DTC mindset.

• Hybrid Models on the Horizon: Traditional brands may explore a hybrid approach to selling, with some adopting digital platforms while keeping dealerships central.
  

NEWSBITES

Every week, we scour the web for the most essential news. Here’s what you need to know this week:

• It finally happened: Stellantis’ CEO will retire in 2026. 

• Honda recalls 1.7 million vehicles due to steering issue

• These are the 10 most complained-about cars in the US. Does yours make the list?

• These are cheap cars and SUVs you can buy for under $25,000

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LONG READ

Will car dealerships disappear?

Or, rather, do you want them to disappear? Plus, how did they become so essential?

There's a big if to start this article. If you don't own a dealership, chances are you don't like working with them.

The sentiment around them is common (as this Subreddit's name eloquently describes). 

While not all of us will hate them, we don't like going to them, be it for buying a car or having it serviced.

There's a commonly held belief that they will rip us off, and, to be fair, evidence stacks against them, as this video explains. 

That's where EVs come into play.

It's not only that we will (likely) depend less on fossil fuels–it's more complicated than that. The way we view car ownership could change.

Thus, the question arises: will car dealerships disappear? 

Why the future of dealerships is uncertain

Car buying has evolved incredibly rapidly in recent times. You can now buy a car without even seeing it, thanks to the dramatic rise in virtual dealerships. 

Then there are car subscriptions.

As if lending and leasing a car weren't complicated enough, this new business falls between them and offers customers another way of buying a car. 

This article explains vehicle subscriptions in more detail and makes a crucial comparison to help us understand the future of car buying: think of a car as a phone, and you get the idea. 

Tesla plans to take this a step further, which has made the issue a bit more complicated.

After all, how do you transfer car updates, upgrades, and software-based features that are non-transferable? This article dives into this odd and fascinating topic.

 All these changes revolutionize how we buy cars and, at a distance, the traditional dealership holds on for dear life. So, should it be scared? 

The reality is that, in the short run, dealerships will not disappear because they are too powerful and have laws protecting them. 

How dealerships grew

Dealerships first appeared in 1889, and they made perfect sense. Automakers loved them from the start for several reasons.

For example, the company only had to worry about producing cars, not selling them. 

Here’s more on the history of the car dealership.,

All they needed to do was wholesale a car fleet to the dealership and walk away with cash. 

Also, they could easily regulate dealerships to operate in their conditions. It was a pact with the Devil, of sorts, as dealerships could make money but had to play by the rules.

It might make a little sense from the outside, but there was a lot of money in it for dealerships, mainly because nobody else sold cars.

Dealerships blossomed during the 1910s and 20s, but then there was a tug-of-war between the manufacturers. It made more sense to have fewer dealerships but with higher quality.

After all, as we explain, automakers made some of the rules.

So, the number of dealerships dwindled in exchange for quality and, most importantly, control. 

The following image shows the number of dealerships over the years, but that didn’t take away their power.

Read the full article on the link below.