The toll that projected industry disruption and changing vehicle ownership patterns will take on dealerships now seems real.
So real, in fact, that even a prominent dealership buy-sell advisory firm is telling its clients to buckle down: Develop a 20-year plan that will enable you to thrive in a landscape with far fewer dealerships — or think about selling your stores.
It's advice that Brodie Cobb, founder of Presidio Group, of San Francisco, didn't come to lightly. But he deems it necessary in the wake of several studies and consultants forecasting a future with far fewer U.S. dealerships.
And while suggesting that dealers sell their stores could benefit the firm in the short term because it would lead to more deals, the advice may seem contrary to Presidio's long-term vitality because the firm also has an equity stake in auto dealerships.
"We're not particularly pleased that the world is changing the way it is. We would rather have it stay the same, because owning dealerships is a very nice return and profitable business that we enjoy very much," Cobb told Automotive News. "So when we talk about this, it hurts us, too. We, too, need to understand the future, form a plan and not just put our head in the sand and hope it goes away."
Presidio, which has handled nearly 90 dealership transactions totaling more than $5 billion since its inception in 1997, declined to disclose specifics about its investments. Cobb said the firm has not divested any stake in dealerships, but its principals will meet and talk in the coming months about how and when to do so.
Certain private dealership groups, some of the largest in the country, are studying and analyzing the forecasts, Cobb said.
And some progressive dealership groups are dabbling in partnerships with mobility companies and services such as vehicle subscription programs to set themselves up for the future.
Bill Cariss, CEO of Holman Strategic Ventures, agrees that dealership consolidation is likely. Cariss is tasked with identifying investment opportunities for parent Holman Enterprises, which includes the 34-store Holman Automotive unit. And while Cariss said last month that he sees a future with traditional dealerships, he also is bullish on vehicle subscription programs and sees mobility fleet management as the "holy grail of the future of our business."
Holman jointly funds Flexdrive, a vehicle subscription service with Cox Automotive, and owns ARI, a fleet management company that manages or leases some 1.8 million vehicles.
"We're trying to make sure we remain relevant for generations to come," Cariss said.
The timing and degree of the projected disruption is open to debate.
In a study for the National Automobile Dealers Association, consultant Glenn Mercer predicted the number of U.S. dealerships would drop to about 16,500 in 2025 from 18,000 in 2016. He also said in late 2016 that the number of dealers would fall to 6,500 owners by 2025 from about 8,000 in 2016.
At the end of 2017, NADA said there were 16,802 dealerships in the U.S. and 7,695 dealers. An NADA spokesman said the association has no dealership count forecast past 2025. NADA's figure is lower than the Automotive News Data Center's count of 18,327 light-vehicle dealerships in the U.S. as of Jan. 1, 2018, up 66 from a year earlier.