Ancient Greek philosopher Heraclitus famously said, “The only thing that is constant is change.” While those words were spoken some 2,500 years ago, it rings true today in many facets of modern life. Change has always been part of the automotive retail landscape but there is perhaps no other time in history where the breadth and scope of change looms larger than it does today.
A major impetus for this rapid change is technology, and when one considers just how fast technology is changing our lives, it’s probably safe to say that the automotive retail landscape in 2025 will almost certainly operate in a vastly different way than it does now.
Shaking up traditions
There are plenty of examples to point to today, with the growth and evolution of EVs (electric vehicles) being one of the most significant. Given the need to move away from the wide use of fossil fuels as part of an overall strategy to mitigate the effects of climate change, automakers are investing heavily in an all-electric future. But currently EVs only hold about a 1% share of the marketplace and many automotive dealers struggle with the need to train sales staff as well as provide upgrades to servicing – not to mention the charging infrastructure necessary to make it viable for consumers. The solution to this challenge as well as a possible glimpse into the future of automotive retailing may exist in a new concept that launched in Toronto in 2017.
The EV Discovery Centre is a first-of-its-kind facility globally and is run by Plug’n’Drive, a non-profit organization committed to accelerating the adoption of electric vehicles. The Discovery Centre is where consumers interested in battery-electric technology can go to learn about EVs and plug-in hybrids as well as get the chance to test drive vehicles from several manufacturers who supply the centre with units available for demonstration. Those interested in purchasing an EV or PHEV are then directed back to sales representatives at dealerships who are licensed to sell that particular model. This multi-brand information centre could possibly be adopted to other segments as well, such as trucks, performance vehicles or whatever combination an evolving marketplace can envision.
For some automakers, the growth and implementation of technology is convincing them to forego the traditional brick-and-mortar dealership model altogether.
Showroom vs Sales Floor
One of the most striking examples of this comes from Tesla Motors, which has shunned the traditional dealership model and opted for a combination online and physical system. Instead of dealerships, Tesla builds galleries in shopping malls or other busy retail centres where you can look at models, gather information and book test drives. What you can’t do, however, is purchase one on site. That process is instead conducted online and without the use of a dealer intermediary. With fixed pricing and a streamlined process, the sales transaction offers convenience to buyers, topped off by delivery of their new vehicle right to their home address.
This type of approach also formed the basis of how Hyundai opted to launch its new premium Genesis brand. To mitigate the financial risk of building a network of physical dealerships in the beginning, Genesis developed what they called a “concierge service” approach with their website being the primary interface. Everything from learning about their vehicles, to arranging a test drive, to the actual fixed-price purchasing process originates online. Soon after launching the brand, Genesis heard through feedback that there still existed a desire among some to visit a physical space, so similar to Tesla’s concept, retail boutiques are now rolling out in limited fashion.
The Genesis concierge service approach is transformative, but is still built upon traditional financial arrangements. The payment trifecta of cash, financing or leasing has been the de facto standard for generations, but as we start looking ahead, even those stalwarts of automotive retail are going to be shaken up.
A New Model of Ownership
Proof of that comes from the recent launch of a new subscription-based program in Canada by Volvo known as CARE by Volvo. While other manufacturers – Cadillac, BMW and Porsche, for instance – offer subscription services of their own, they are designed to cater to customers who want to hop in and out of vehicles across the automaker’s model range. Volvo instead offers customers a new simplified and streamlined approach to ownership as the process can be done with a few taps on a smartphone and take as little as 10 minutes to complete.
Included in one price consistent across the country are services like winter tire installation and storage, 24/7 roadside assistance, scheduled maintenance, and a concierge service that assists subscribers through every step of the process including coordinating delivery with their local Volvo retailer. Subscriptions are for two years maximum with the ability to upgrade your vehicle after 12 months. No long-term contracts are signed and there is no option to buy out the vehicle after the term is done such as you would have in a lease. While the program is launching with only limited model availability, the goal is to eventually offer the option across its entire model line up.
From the days of the very first automobile, change has always been a part of automotive retailing. Many of the earliest automotive purchases in the late 19th century involved direct purchasing from the manufacturer or from utilizing mail-order services. In the mid-twentieth century car boom, dealerships had to adapt to providing pricing transparency with the advent of Monroney stickers, the now-commonplace information sheet found on the side window of every new car on display. And the early advent of the internet in the 1990s forced automakers and dealerships to enter the digital age, changing the way the auto industry looked at promotion and marketing.
Historian Arthur Schlesinger once said that “science and technology revolutionize our lives, but memory, tradition and myth frame our response.” As the automotive retail industry contends with the realities of a rapidly changing consumer landscape, it remains to be seen whether nostalgia and familiarity hinder its potential or simply provides a framework for a new way of doing business in the years and decades ahead.
By: Eric Novak
Eric Novak is an automotive and environmental journalist and is the co-creator of the Canadian Green Car Award. He also runs a media, marketing and communications company and teaches part time at Seneca College in the Faculty of Business. Eric loves to search out great stories about the world we live in and proudly considers himself to be a glass is half-full kind of guy.