Car dealerships set to disappear as vehicle sales move online, study suggests

UK automotive executives expect that almost half of all car dealerships will disappear in less than a decade, as car buying moves online.

The KPMG’s Global Automotive Executive Survey 2018 found that 75 per cent of UK automotive executives think that 20-50 per cent of the ‘brick-and-mortar retailers’ will no longer exist by 2025.

Although the shift to completing a purchase online hasn’t been huge, the UK has already seen car brands adopt ways to make it possible. Even when the purchase is not completed online, retailers have seen more consumers arriving in store already knowing the car they want to purchase due to online research.

KPMG surveyed 907 automotive executives, occupying leading positions such as chief executive, president, chairman or C-level executives. According to the respondents, the surviving dealerships will be those with strong servicing or used car facilities.

Justin Benson, UK head of automotive at KPMG, said: “The majority of UK automotive executives are convinced that the only means for dealers to survive is by restructuring into a service factory or a used car hub in the future.

“This is certainly a warning sign for physical retailers and presents a need to rethink retail concepts and business models, particularly with customers purchasing more of their goods and services at the touch of a button.”

Nevertheless, Edmund King, AA president, says he believes dealers won’t die out

“In our view the car dealers won’t disappear but they will get smarter and their working methods will change,” he said.

“There is no doubt that more buyers are doing their comparative research on line and we are certainly experiencing this via the AA Cars web portal.

“However, the majority of consumers today and in the future still want to see, touch, smell, hear and drive their potential purchases before they make that final decision. After all the car is the second biggest purchase most people make after their home.”

Many automotive companies have already started capitalising on opportunities by providing digital services, as well as selling cars. Which is why 75 per cent of UK automotive executives also think that data is going to be the fuel for the future business model of automotive companies, as the shift towards an autonomous vehicle future accelerates.
James Hind, chief executive of carwow, said: “It’s no secret the industry is undergoing a period of significant change. Changes to business structures and economic models are already happening in many areas of the car retail industry.

“We all know that the way the public shop has changed. Consumers expect a convenient, frictionless, fair and transparent experience as standard, in all sectors.

‘The growth of carwow and other online car buying services are evidence of the shift in buying behaviours. However, there is definitely a place for dealerships in the future, even if the forecourts will look a little different to today.’

By Becca Chaplin