The dealership in 50 years: Large, luxurious and high-tech
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It has a bigger service area and many more conveniences - even luxuries - to help Jetson pass his time. Interactive digital kiosks in the showroom educate him about the myriad product and technology choices he faces. After all, his new wheels probably won't be powered by that old-school fuel, gasoline.
The dealership's owner is different from her turn-of-the century predecessors, too. She belongs to a shrinking corps of U.S. dealers. But those dealers are more likely to own multiple franchises and stores, giving them more clout in their factory relations.
Automotive News asked industry executives and futurists to predict the evolution of dealerships, and the dealer franchise system, over the next half-century. They agree that as competition increases, customer service and satisfaction will grow more important than ever before. So will the adoption of new technology, as vehicle buyers increasingly demand price and product information at their fingertips.
Dealerships will speed up sales and service transactions, the experts say. And they will offer amenities to help customers use the time they spend at dealerships more efficiently and pleasantly.
"American consumers are looking for someone who can eliminate the complexity in their lives," says Mike Jackson, CEO of AutoNation Inc., the nation's largest dealership group. "The Internet has been a fantastic tool to resolve complexity. That will continue and accelerate."
Jackson predicts "a significant decrease in transaction times. And the productivity of individual associates in the store will go up, all enabled by the Internet and technology."
Still kicking tires
Even as the automotive retail landscape changes, though, industry experts insist that the physical dealership isn't about to disappear.
Consumers will handle more aspects of vehicle purchases online, including financing. But they'll still prefer to visit the dealership and test drive the car or truck before they decide to buy, Jackson says.
AutoNation customers "want to come to the store and see that the green (vehicle color) on the Internet is close to the green that they're about to spend $29,000 for," he says. "We offer free delivery. Nobody accepts it."
What will change, Jackson says, is that dealerships - and especially their service departments - will get bigger. Dealerships are likely to continue to seek a larger share of revenues by competing with quick-lube stores for routine service work and independent shops for bigger jobs.
Alternative-fuel vehicles will bring their own maintenance demands, says Jackson, who began his industry career as an automotive technician. And as vehicles become more complex, dealers will invest more in their service operations, Jackson says.
Others disagree. Oregon megadealer Ron Tonkin says he expects service areas at the dealership of the future will shrink because vehicle powerplant designs are becoming simpler.
"The service departments will be considerably smaller because it will be a matter of not so much repairing things anymore as it will be replacing modules," Tonkin says.
Lap of luxury
Whatever the size of their service operations, dealerships will seek a competitive edge by pampering customers who come in for sales or service, experts predict.
Among the amenities they foresee dealerships adopting: free lunch buffets, on-site restaurants, plush waiting areas with sophisticated TVs, expansive children's play areas, Internet workstations and nonautomotive retail stores.
Bert and Beau Boeckmann operate Galpin Motors in North Hills, Calif. The father and son long have been innovators in customer service.
"The big dealerships will continue to get bigger," says Beau Boeckmann. "They'll have services similar to what we do at Galpin, whether it's Starbucks or other amenities that make people feel more comfortable and make the purchase experience more enjoyable and less stressful."
As dealers confront the need to invest in their stores, analysts say, they also are likely to face rising real estate costs. One possible answer: the "vertical dealership," which includes a multistory showroom and a service area in an enclosed building. Vehicles are parked inside instead of on a lot.
Looking up
Ponch Herrera is a partner at Pavlik Design, a Fort Lauderdale, Fla., firm that designs dealerships. He says he has built three vertical stores and expects demands for vertical designs to increase significantly.
In the next 20 to 50 years, Herrera predicts, about 30 percent of new dealerships will be vertical.
"It's definitely an answer to a lot of different problems, such as hail, snow, cold weather, rain," he says.
Herrera foresees future dealerships offering large modern showrooms full of product data. "I see the showrooms being simpler and more about educating the consumer about what (alternative-fuel) vehicles can or cannot do," he says.
Automakers are working with dealers to design the look of new dealerships as a way to define brand identity. Toyota's Image USA program calls for showrooms that emphasize the company's product lineup, says Nancy Davies, vice president of retail market development for Toyota Motor Sales U.S.A. Inc.
Toyota dealerships are moving away from old-style sales desks and closing rooms, Davies says. A new dealership in Texas was built with large amounts of recycled materials such as carpeting and tile - a trend Toyota hopes will expand, she adds.
"That's something we would like to spread to other dealers and offer that as an option to them when they build new buildings," Davies says.
Pressure's off
Joe Eberhardt, the Chrysler group's executive vice president of global marketing, sales and service, agrees that dealership sales operations will continue to change.
"Closing rooms and things of the past that were quite commonplace - I'm not sure we'll see too many of those in the future," Eberhardt says. "We'll move away from a pressure sales environment to more of a customer-relations environment."
Steve Lyons brings an intriguing perspective to the Ford dealership he plans to open in metropolitan Phoenix by early 2008. Lyons left Ford Motor Co. this year as vice president of North American marketing, sales and service.
Lyons says he expects showrooms of the future to include plenty of informational computer screens. They will give consumers the data they need to make purchase decisions, he says.
"I'm talking about providing detailed competitive comparisons and sharing service histories," Lyons says.
Location, location, location
High real estate costs in urban areas will change dealers' location decisions, Lyons says. Auto malls where cities can zone land for dealership use "are going to become more the norm," he says.
Paul Taylor, chief economist of the National Automobile Dealers Association, says he expects dealerships to migrate from rural to metropolitan areas in coming decades.
"The trend has generally been to more suburban and urban areas," Taylor says. "We don't see anything on the horizon that stops that trend."
Land expenses could prompt many dealerships to separate their sales and service areas, says Sheldon Sandler, founder of Bel Air Partners LLC, an investment firm in Skillman, N.J., that works with dealers.
Dealers will build sales showrooms on high-priced land in densely populated areas, Sandler predicts. They will build service outlets on remote sites where property costs are cheaper, he says.
David Fry, who retired last month as CEO of Northwood University, a Midland, Mich., school that trains dealers, predicts that off-site service operations will repair vehicles of all the brands a dealer sells, not merely those sold in a particular showroom.
"That's going to be a big difference," Fry says. "But it will be very profitable if it can be done."
Even as technology gives Americans more choices in the activities they pursue, it also imposes new demands on their time. That trend is likely to accelerate over the next 50 years.
Time is money
As a result, industry leaders say, consumers are likely to grow increasingly impatient with the time they must spend at dealerships, engaged in tedious sales transactions or waiting for their vehicles to be serviced.
Lyons says dealers will need to become "much more sophisticated in terms of information management and handling."
"Growing technology in cars and the need for dealers to find ways to improve profitability are going to put even more pressure on the service business," Lyons says. Dealers will seek to maintain "a service relationship with the consumer throughout the life of the vehicle, which typically doesn't exist today."
Such innovations as allowing customers to schedule service appointments by text-messaging will become commonplace, Lyons says. Dealerships will hire employees who specialize in electronic communications with customers, he adds.
Managing the metal
New technology also is changing the way dealers will handle their inventory, says Dick Colliver, executive vice president of Honda and Acura auto sales for American Honda Motor Co. Inc.
The number of vehicles that dealers keep on their lots probably won't change much, Colliver says. But online technology will enable automakers to pinpoint with much greater accuracy which cars and trucks are most likely to appeal to consumers in various regions - and make them available to dealers - he adds.
"If you take Internet data on a vehicle configuration and load that information into your system, you've got a pretty good idea of how people want to spec out their cars," Colliver says. "It's just studying more and more what consumers want and being able to provide that."
You may e-mail Gail Kachadourian at gkachadourian@crain.com
