DETROIT — Despite the coming age of electrified and autonomous cars and the specter of growing online sales, dealerships have a future, and a bright one at that, two luxury-brand executives say.
Audi of America CEO Scott Keogh calls the industry's shift a massive opportunity for dealerships.
Four pieces of dealership revenue — new-vehicle sales, used-vehicle sales, service and parts, and new digital services — stand to benefit, Keogh said, arguing that the industry's doomsayers have it all wrong.
"It's not the end of the world," Keogh, 48, said at the Automotive News World Congress last week. "It's the beginning of a powerful, all-new world."
Likewise, Porsche Cars North America CEO Klaus Zellmer has his eye on how dealerships can elevate the brand's customer experience to a level to rival luxury brands both in and out of the auto industry. Though the purchase process will transform — Porsche expects 30 percent of all its cars will be sold online by 2025 — he insists the dealership will remain a key element.
"I very much believe in the dealership being the mothership of our future business model, despite the fact that our online business has to be incorporated in there as well," Zellmer said at the World Congress. "We have to find the ideal balance of people starting their purchase journey with us online to them being handed over seamlessly to our sales staff to complete a transaction or complete a service."
Porsche is working with the Disney Institute to train U.S. dealership employees and transform its retail culture around customer care. The U.S. program is a pilot for an approach that eventually will go global.
"If we don't get the culture right, we will not prevail," Zellmer, 50, said.
Even as vehicles increasingly move to electrified powertrains — Porsche estimates half of its new vehicles will be electrified by 2023 — Zellmer sees a big service opportunity by reaching out to owners of classic vehicles. There are more than 211,000 Porsche classics in the U.S. now mainly serviced by independent shops. Porsche aims to win them back. It has named eight of its 189 U.S. dealerships as classics partners and plans to increase that to 46 in the next five years.
Keogh expects new-vehicle sales to jump as new technologies lure luxury customers back into showrooms for updated rides. Automakers and dealerships should gain a new revenue stream from digital services that can be offered in those electrified, piloted, digitally connected vehicles.
Used-vehicle sales should rise as regulations restrict automakers from making combustion engines as powerful as those sold today, he said. And service will benefit from the long tail of older combustion engines in need of repair, with added maintenance of electrified vehicles as a bonus, Keogh said. There are 270 million vehicles on the road right now, he said, and combustion engines will likely represent the majority of new sales for at least several more decades.
"Just because electrified vehicles can come," Keogh said, "does not mean a light switch has been flipped and that the service business is over."