Dealerships of Tomorrow

Car dealerships of tomorrow will keep inventories down, while using a high-speed ordering system to quickly fulfill customer vehicle requests.

That's what Cars.com CEO Mitch Golub foresees from current industry trends, many of them Internet driven.

He predicts dealers will resist building large facilities and stock fewer cars as more and more consumers go online to shop for vehicles before visiting the dealership.

“We won't see so many huge, incredibly opulent dealerships because dealers won't need them,” Golub tells Ward's. “We've already seen a drop in inventories. We see those trends continuing. Dealers are working at acquiring the ‘right' cars.”

That means using inventory-control software to determine real-time local market demands — and ordering cars accordingly.

For their part, auto makers are striving to achieve greater manufacturing flexibility so they can nimbly adjust production of different models based on demand levels.

A rapid-response ordering system would complement that manufacturing effort so dealers can promptly get models their customers want, eliminating the need for filling sales lots with so many cars.

Traditionally, dealerships have maintained acres of vehicles so customers can roam the sales lots looking for something that appeals to them. But that business model comes with high costs to dealers, who essentially buy new cars wholesale from auto makers before reselling them on the retail market.

In recent years, many recession-stung dealers have looked at ways to lower those so-called floorplanning costs. One way is with leaner inventories.

“If dealers can lower inventory volumes and still remain responsive to customers, there is a lot of profit to be made,” Golub says. Advanced technology will let dealers “order cars quickly and get them to customers much faster.”

He foresees dealers in coming years allowing consumers to buy cars “any way they want,” whether as “walk-in” customers or Internet users who only go to the dealership to wrap up transactions.

“Some customers will have cars delivered to their home,” Golub says of future shopping.

A few dealerships, such as Hyundai of St. Augustine, FL, or Team Hillsdale Chrysler in Hillsdale, MI, already offer such home-shopping services.

“We'll see customer service like never before,” Golub says.

There's even talk of dealerships someday offering simulated demonstration drives for new cars. “But I think the used-car customer will still want to do the actual test drive,” he says.

Some things won't change.

“Cars are expensive, and customers still will want to know the vehicle and understand who they are doing business with when buying such a product,” Golub says.