Steven's Blog

car dealership

The Post-Distributor Age

We are living in a post-distributor age. Gone are the days of cajoling distributors in representing your products to customers—often poorly. The best businesses of today make it easy, comfortable, and fast for customers to buy actually what the want and how they want it.

A friend of mine in Australia told me how he just bought a new Mini car completely online. He never visited a car dealership. Never test drove the car. He configured all the options online. It was delivered to his house, and he loves it.

In my view, car dealerships are dinosaurs and are not long for this world. During Japan’s state of emergency, all car dealerships across brands experienced a decline in walk-in traffic. Yet at the best managed ones, sales did not decline. Sales people aggressively contacted existing customers and followed up on leads. “

“Want to test drive a car? No need to come to us. I’ll bring the car to you.”

“Want your car serviced? No problem. I’ll come pick it up, and then bring it back to you.”

It causes me to ask whether auto dealerships even needed at all. Manufacturers, even the non-Japanese ones, can run their own distribution.

No need for the massive capital investment in prime real estate for showrooms, but rather more efficient service nodes for reaching out to customers. Staffing number requirements are also reduced, and if done right, like in the case of Mini in Australia, customer service actually improves, and that’s not all.

Manufacturers can also better control their marketing and branding. Independently-owned auto dealers are notoriously inconsistent in taking up costly campaigns that manufacturers meticulously plan, whether advantageous financing options or appealing product promotion, despite ostensibly being in the dealer’s own best interests to do so.

Dealership owners with diversified business interests are also not infrequently at odds with the business interests of the manufacturer. More than once I have heard of an owner who represents a luxury car brand merely for the cachet of doing so because it helps promote his or her sales in a non-luxury car franchise. More recently I heard of a a luxury car dealership owner, whose interests also include a chain of distinctly non-luxury cafes, promote the cafe business in the car dealership and the car dealership business in the cafes—much to the consternation of the manufacturer. So much for the manufacturer’s investment and efforts in branding. Who needs this kind of trouble?

A number of CEOs I know across industries have long talked about upending industry business models that have persisted long after their use-by date. Some approach dramatic change to distribution with tentativeness and trepidation. Others have taken bold action to do so, and even before the COVID pandemic crises, I have seen the bold swell in numbers.

Yet crises bring with them disruption and volatility, and with that an enhanced openness toward and appetite for change that might have seemed overly risky in the best of times—although in reality it probably wasn’t. If in your business you have been considering a disruptive change, there is no better time to act than the present.

If in your business you have been considering a disruptive change, there is no better time to act than the present. Click To Tweet

Rest assured. In every industry, there is a disruptor. If you are looking around and you don’t yet see one, make sure that disruptor is you while you still can.

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