MOTO 2030 is the Friday series of Gazeta.pl, in which we discuss the most important topics related to the future of the automotive industry, transportation and technology. There will also be interesting designer stories and descriptions of the history of companies whose pasts have had an impact on what the automobile industry will look like in the future. Cars, roads and cities change very dynamically before our eyes. Every Friday, Moto.pl journalists write about these changes. Here you can find all articles from the MOTO 2030 series.
Penske Motor Group is a California company (part of Penske Corporation) that deals in new sales cars. She owns the world’s largest auto showroom: Toyota Longo in El Monte, located in the Los Angeles metropolitan area.
Toyota i cars can be purchased at Longo Lexus. The car sales and service center area exceeds 200,000 m2. The selling point will be an understatement because Longo is an entire campus. There’s also Starbucks, a Subway store, a Verizon store, a rental car company, and the headquarters of a western California auto club.
Toyota and Lexus dealer history dates back to 1967, when Dominic Longo began selling in El Monte. The famous Penske Racing team owner, businessman Roger Penske, who runs several American racetracks, purchased the Longo in 1985 and expanded it to its current mega dimensions. And now he is taken care of by his son Gregory Pinsky. The scale of the project makes it possible to realize the volume of commercial mediation in the sale and servicing of new cars.
Penske Motor Group, as the name implies, is a dealership group with four different showrooms in California. Similar companies operate on a smaller scale all over the world, as well as in Poland. It will surely be easier for them to survive in the changing auto market than smaller companies with single point of sale and car service. As long as it can change.
They will have to do this, because all auto trends go against the traditional sales model. Less people buy new cars. For various reasons, they are increasingly borrowing it. This provides greater flexibility, adapts to the changing work pattern and is not financially burdensome. By the way, this means that when drivers want to change SentencesThey don’t come to the dealer, but to a car-sharing company or a company that deals with medium and long-term rentals.
The difficult fate of car sellers. Renting instead of selling is only the first reason
There are other problems as well. Car buying is moving online, again for a variety of reasons. For younger generations of customers, this is a natural way to get products and services. The changes were accelerated by the pandemic and by companies that were growing aggressively, which from the start applied this sales model to cut costs. It is primarily about Tesla And other startups you copy. Classic car brands, led by Volvo, also promised a similar sales strategy.
So far, self-driving cars are the song of the future, but this trend is also discouraging buying in favor of renting. What should we do with our own car if we don’t have the fun of driving anyway? In addition, all cars are becoming more expensive and less available, which means that only the wealthiest part of society will be interested in buying them. The poor will have to make do with borrowing for economic reasons.
Another problem is the service. Dealers are said to earn the most, primarily because declining margins for new cars have made it difficult to make a living primarily from their sales. But electric cars, which will dominate the market in two decades, are much easier to build.
The first 563 Mercedes ‘Ponton’ 190 (W 121), 219 (W 105) and 220 S (W 180) are waiting for customers. Photo: Mercedes-Benz AG
Fewer components wear and tear, so it’s hard to make money repairing and servicing them. In addition, the percentage of remote repairs increases, when problems can be resolved by updating software performed over the air (the so-called over the air).
Will merchants live in such a world? They have to play a different role
The future for auto sales and repair companies is rather bleak, but in practice it doesn’t have to be that bad. First of all, buying online doesn’t mean you’re done with it. Someone has to prepare the vehicle and documents and hand them over. In addition, many customers want to feel and drive the car of their dreams, even if they choose it online.
In such a situation, dealers can turn to car showrooms, where customers come educated and almost determined, but willing to put an actual end to their “me” and thus make sure that they are making the right decision.
Mazda Motor Europe Vice President Wojciech Halarewicz also noted the educational and advertising role for dealers, which they must play especially in the case of electric vehicles. Customers are wary of them, especially if they have never encountered such cars before. If they are lucky, they can ask the neighbor who the so-called early adopters are, but in most cases it should be based on a mixture of misconceptions and common beliefs.
Many people do not know the advantages of an electrician until after a test drive. Then it turned out that it is not only a choice out of common sense (environment) or necessity (less and less availability of conventional cars), but also because of its exceptional comfort and instant acceleration. In times of electricity, merchants can and should become brand ambassadors. This, unfortunately, depends largely on how the parent company deals with them.
This is what a typical turn-of-the-century automobile and service showroom looks like. Photo by VW
The end of spontaneous car purchases is coming
The selling points will definitely change. It is already happening. Dealers have fewer and fewer cars in stock that can be purchased right away. In the future, cars will be almost exclusively made to order. In this case, the merchant who has better connections with the headquarters and the ability to organize the dream model faster will win. Organizational and negotiation skills will count.
To successfully compete with the growing digital sales platforms, merchants need to develop similar capabilities and capture online customers before they reach the showroom or may not be able to do so. Rather, it will be done by powerful online players who mercilessly negotiate prices with the manufacturer, often bypassing the middlemen.
In more mature auto markets (such as the United States), dealers will stay longer because they are protected by regulations. This is why Tesla has such a problem with direct online sales there, especially in states like Texas. In addition, it cannot be ignored that the margin is higher, especially in electric cars, because manufacturers are trying to recover costs incurred during the development of new technologies. Everyone now says they aim to maximize profits, not sales.
Converting sales to rental, for whatever reason, means that merchants should turn to companies that provide such services and begin to combine the two, especially the larger ones. They can also enter into partnership agreements with car sharing companies and become a place where customers choose a new car. Since car companies have factories, sales networks, and banks, it is only natural to put the pieces of the puzzle together in an efficient system.
This is what the car show and point of sale looks like in 2022. Photo: Volkswagen / Ulf Puschlip
What about electric car service? Can you make money from it?
True, due to the growing popularity of electric cars, the number of servicing and mechanical repairs is declining. However, even these cars require regular servicing. Besides, body and paint repairs will be required as long as accidents occur. And they, and not mechanical repairs, have to earn much more certified services. Factors that reduce this income are safer and more self-driving cars. Unfortunately, we won’t soon reach a level where collisions and accidents are rare.
New Car Dealers: Showrooms and Licensed Services Doomed to Slow Extinction? It doesn’t seem like it, but smaller companies will struggle to market. However, companies that will switch to multi-platform and all-in-one services may thrive in the auto industry.
Deloitte analysts and auto market specialists interviewed by McKinsey say that without a complete transformation, it will be difficult for them to survive in the market as early as 2035. We will certainly see further consolidation of the industry and the dominance of the big players. There will be more and more companies like Penske Motor Group in California in the future. They will fight or communicate with the giant internet platforms to buy and rent new and used cars.
A representative ‘showroom’ will always be needed, especially for premium brands Photo Daimler AG
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