DETROIT -- Although not normally a contrarian, Audi of America President Scott Keogh says a coming age of electrified and autonomous connected cars won't be an apocalypse for auto dealerships.
On the contrary, he sees massive opportunities to grow all parts of the auto retail business.
Keogh, 48, who has headed Audi in America since 2012 and whose brand is on a 98-month streak of year-over-year sales growth, said the industry's doomsayers have it all wrong. Four pieces of a dealership's revenue stream -- new-vehicle sales, used-vehicle sales, service and parts, and new digital services -- stand to get a boost from the products to come.
"It's not the end of the world," Keogh told the Automotive News World Congress Wednesday morning. "It's the beginning of a powerful, all-new world."
Keogh said that coming electrification -- Audi believes 30 percent of its new sales will be electric vehicles by 2025 -- will provide a powerful stimulus to juice new-vehicle sales, especially at luxury dealerships, just as the development of luxury SUVs did.
He said the average age of luxury cars on the road is nearly 12 years, and that buyers are waiting for nonincremental change in potential replacement vehicles to lure them back into dealerships for a new car. Electrified, piloted, digitally connected vehicles, which Keogh calls "progressive luxury," will be attractive incentives for buyers of new luxury vehicles.
On the used-vehicle side, Keogh argues that while tightening emissions regulations may limit what automakers are allowed to sell, the limitation won't apply to used vehicles. That means today's powerful internal combustion engines may be unavailable on new-car lots.
"The only way you can get some of these vehicles will be as a used car," Keogh said, adding that the specialized demand will boost dealership used-car revenue.
In terms of service and parts, where some believe that electrification could cut service visits by as much as 40 percent, Keogh argues that "the tail of internal combustion engines" in the U.S. fleet is long.
"Just because electrified vehicles can come does not mean a light switch has been flipped and that the service business is over," Keogh said. He said 270 million vehicles are on the road and internal combustion engines will likely account for the majority of new-vehicle sales for at least several decades, guaranteeing revenue from service and parts for the foreseeable future.
Keogh also sees a new, fourth revenue stream for dealerships and automakers from digital services integrated into vehicles. On the retail side, Keogh said Audi dealers are well-positioned to incorporate digitization into their retail showroom experiences, much as other high-end retailers have.
During a Q&A after his presentation, Keogh reiterated that he sees no need to expand Audi's U.S. retail network beyond its approximately 300 dealerships, saying he is more concerned about increasing throughput and profitability for Audi's dealers.
Keogh also explained his belief that automakers that offer higher levels of autonomous driving must accept financial responsibility for the vehicles' actions while self-driving, as Audi has agreed to do when its Level 3-capable A8 comes to market this year.