Fitzpatrick and Walters spoke with Staff Reporter Hannah Lutz last week in separate interviews.
Q: How will dealerships play a role in mobility?
A: Fitzpatrick: One possibility is the dealer takes more of a fleet management role. If a certain company has a large fleet, they will have to have them serviced somewhere. The dealers have the facilities and the personnel to service the fleets. I know there are some dealership groups that are putting their toe in the water with the subscription services. We have the inventory at our disposal to be able to do that.
Walters: On the subscription model, the dealerships are going to have to maintain a level of inventory that meets customers' demands. If everybody wants a truck, and there's none ever available, you have to adapt your inventory levels. What will be interesting to me is how floorplan adjustments will be made to cover those. You wouldn't have inventory of hundreds of cars just sitting there waiting for someone to buy them. It would be a little bit more come and go. A car would come in to get maintenance and cleaned and be ready for delivery.
What will dealerships physically look like?
Fitzpatrick: If the pendulum swings, and if we change more into a service industry, the physical makeup of a dealership certainly could change. We may not need to stock as many vehicles. Hopefully, our service department will get a little larger to handle all the cars we are servicing. [Space] we could potentially give up on the sales side in terms of size, we could add back onto the service side. I don't know if there is a net loss. It could be a gain.
Will the number of dealerships shrink?
Fitzpatrick: I don't know if the number of rooftops will decrease, but number of owners will certainly decrease. The bigger groups will continue to buy up the single-point stores, or bigger groups will buy smaller groups. To drive efficiencies in the business, we need to create those economies of scale and operational efficiencies. They are necessary ingredients for long-term profitability, relevance and viability for the dealer body.
Walters: When you have mandated manufacturer requirements on facilities, you're squeezing the small dealers as it is. They don't have the capital to make all these changes. We're seeing that more and more every day — that these smaller mom-and-pop stores are getting absorbed by the bigger groups. You wouldn't think a Sonic or an AutoNation would want to come into a rural area, but we're seeing that happen.