Automotive retailers don't need to panic about industry woes, study says

Automotive retail faces a slew of existential threats, from electric vehicle worries to an uncertain economy and more. But there's no need to panic, according to the results of a study released Thursday during the NADA Show in Las Vegas.

"Dealership of Tomorrow: 2024 Update" tracks a timeline of perceived threats to the industry, going back to World War II, work force unionization in the 1940s, the Sept. 11, 2001, terrorist attacks and industry bankruptcies during the Great Recession.

Its conclusion? The auto industry has faced relentless threats for decades, but nothing has derailed the sale of new autos yet.

"We've seen this movie before," said Glenn Mercer, the study's author.

Mercer has presented updates to his report at the NADA Show every year since 2017. NADA commissioned previous studies, but now Mercer does it independently.

And every year, he said, a new threat emerges that people worry will hurt or wreck the industry. But it still survives, and there still are about 18,000 rooftops, Mercer observed.

"We get sort of trapped in this eternal present where we forget everything we've been through in the past, and today always looks like it's more extreme than it ever has been," Mercer told Automotive News.

But dealers learn to meet challenges and adapt, he said. That's why he thinks the industry is currently in a less disruptive state than many experts say.

The report uses a rating system devised by Mercer to judge whether a trend or development is going to be a problem. A red light rating means a development is a threat, a green light rating means it could be an opportunity for dealers, and a yellow light rating means it is a "wait-and-see."

The report compared perceptions of each trend from 2017 with Mercer's forecast as of 2023, along with his rating.

In 2017, mobility services, such as Uber, were considered a "revolution" that could even replace private car ownership, according to the report. But that didn't happen, Mercer said, and so in 2023, such car services were rated as only a yellow light.

Another example: The report in 2017 deemed autonomous vehicles to be "revolutionary" and to represent a threat to private car ownership. Now, the report says, AVs are recovering from setbacks, and it's unclear how they may affect the industry. Another yellow light.

In the 2024 report, Mercer said, he gave all the recognized industry trends a yellow light rating for the first time, meaning it's OK for retailers to relax — at least a little.

"It's not a matter of telling dealers and automotive retailers they can just doze off and everything's going to be fine," Mercer said. "It's more a matter of, 'Pay attention, but there's no reason to panic.' "