What are we worrying about?
23 February 2020
US auto retailers were in buoyant mood at last weekend’s NADA Show in Las Vegas; and why not?
New vehicle sales last year were near-record at 17.1 million units, and are forecast to settle around 16.8m for the foreseeable future. Used vehicle values are stable and rising, with demand for used cars (as opposed to pick-ups and SUVs) outstripping supply. They’re also winning back aftersales business from independents as vehicles get more complex to service.
Meanwhile, perceived threats from external factors appear to be receding. Electric car sales are growing slower than forecast and even the most optimistic advocates are now admitting that fully autonomous cars are a long way from reality. Even ride-sharing in the US appears to have reached a plateau.
So, what could possibly go wrong? Being auto retailers, they have to have something to worry about.
Despite strong protection under US franchise laws, there is still a fear that OEMs will move to some form of direct sales. NADA, a hugely active political body, never stops reminding lawmakers at state and federal level that the franchised system is the best way to protect consumers. Dealerships, they argue, serve the community by offering affordable cars and local service.
Then there’s the threat to used car business by online retailers, such as Carvana. It’s gaining traction, especially among millennials who are happy to buy at the click of a mouse, but still only retails about 200,000 cars a year – small volumes by US standards. And it’s having to invest in bricks and mortar pick-up points.
It would be foolish to assume that good times in the US mean everything is rosy here in Europe too. But there’s nothing like a burst of American gung-ho enthusiasm to help you put things in perspective.
With all its complexities, the auto retail industry is pretty simple. Keep your service customers coming back, turn your used stock fast and keep your NSC sweet on new. The rest is just detail.
Auto Retail Network