Reports of the Death of Local Dealerships Have Been Greatly Exaggerated

Small or principal-owned dealerships have an incredible advantage in their entrepreneurial spirit and hands-on approach

In our current business economy, many people are predicting the end of smaller and local dealerships, but I see it differently. Yes, the industry is evolving, but the small and principal-owned dealership is not dead, as so many love to claim.

It’s easy to get caught up in the industry noise, as well as companies coming into the space that didn’t exist just a few years ago. Changing consumer preferences are leading to the growth of disruptive transportation models that are giving rise to a different kind of mobility behavior.

With Wall Street, ridesharing companies, and electric car manufacturers talking about the future of automotive, it’s understandable that many principal dealership owners are uneasy about the future—and about not having the same resources to innovate as many larger groups or consolidators.

We believe an opportunity to compete lies in that uncertainty. Small or principal-owned dealerships have an incredible advantage in their entrepreneurial spirit and hands-on approach, and with open access to the right technology, they will be able to keep pace with innovation in a way they couldn’t before.

In order to level the playing field, smaller and local dealers need access to the same technology that larger dealers use. This is the difference barrier standing in the way of local dealers competing with the larger dealers.

Once these dealers are able to connect to an open exchange, where technology and applications are easily accessible for all, there can be a mindset shift in their business.

I would encourage local dealers to look at the industry with new eyes. They are experts in creating unique experiences for their customers.

Consumer expectations evolve, however, and more car buyers anticipate a tailored approach from first research all the way through to driving their new vehicle off the lot to after-sale service.

Fortunately, the same technology that caused consumer expectations to rise is becoming more accessible to the automotive world. Smaller dealers need that edge to compete.

Dealers should be creating experiences unique to their brand by focusing on the customer experience and execution, and using their entrepreneurial grit and a hands-on approach. What was once viewed as a disadvantage can now be the differentiating factor that will enable them to compete in the changing marketplace.

The idea is similar to new or disruptive companies that flourish online without having a large physical presence—or many times, none at all. Being entrepreneurial and nimble can be your competitive advantage, in this case.

Although disruption is coming, we don’t believe that the dealer retail model will be radically disintermediated, but dealers do need to rethink how they approach serving their customers.

The future for local dealerships is bright: They matter today and they will matter in the future.

Ron Frey is executive vice president and chief strategy officer at CDK Global, responsible for the global strategy for CDK products and services, including the Fortellis Automotive Commerce Exchange.

Ron Frey

1 Comment

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    Mark Dubis July 18, 2018

    Ron is right on the money with his article. Community-based dealers need to leverage technology and digital media, but it has to be appropriate for their market. Additionally and of more importance is to have a dynamic and flexible marketing strategy in order to compete with larger dealer groups. Low-cost dealer marketing networks now make that possible for budget constricted stores in all markets. Keeping a steady flow of prospects coming into the showroom is critical.


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