Death of Auto Dealerships Greatly Exaggerated

In the 1990s, some auto-industry seers predicted consumers would one day shop for, order and ultimately buy cars online, virtually eliminating the need for dealerships.

That day certainly didn't come. With good reason, says the country's top dealer.

“It's not that simple,” Mike Jackson, CEO of AutoNation Inc., the nation's largest dealership chain, says at the Automotive News World Congress in Detroit.

The Internet undoubtedly has facilitated the shopping process. It allows consumers to research cars, check inventories, get pricing and more. Surveys indicate 82%-90% of car shoppers log on and do that.

But for all its benefits, the Internet is far from putting dealerships on the endangered-species list.

“Brick-and-mortar dealerships are here to stay,” says Jackson. “I disagree with manufacturers who want dealers to build huge facilities, but you need the store.”

Why? “It's still a $30,000 product,” he says of typically priced car. “And nothing compares with test driving a vehicle.”

Additionally, the vast majority of customers seek dealership assistance in various ways, from selecting vehicles to financing them. Then there's the transactional paperwork. “It's a complicated process,” Jackson says.

AutoNation pioneered a process that allows consumers to use the Internet for just about the entire buying process, concluding with the vehicle delivered to their homes.

“But only 1% of people want a vehicle popping up in their driveway,” Jackson says. “On the other hand, they don't want to spend a day at the dealership. For some people, one hour is their time limit. For others, it is three hours. For no one is it six.”