HANGING TOUGH IN A BRAVE NEW WORLD

To survive in an Internet-driven business world, dealerships will need to become "hub-and-spoke" operations that are totally "customer-centric."

That's the view of Jon Lancaster, a forward-looking dealer in Madison, WI, who couples his acceptance of an e-revolution facing dealers with a stark warning about losses of many traditional practices.

For one, Mr. Lancaster sees traditional "mother ship" buildings, where vehicle service is performed, giving way to compact outlying stand-alone service centers in the dealer's market.

He also says that an Internet-driven build-to-order delivery system of vehicles would reduce the need for large inventories - and large lots to store them.

Yet such changes won't occur overnight.

"You can't do it all at once, it's got to be a step at a time," says Mr. Lancaster, who began selling cars at age 22.

His Chevrolet-Lexus-Nissan-Toyota stores occupy a 16-acre mall tract in the Wisconsin capital.

Telematics, in-vehicle communications systems linked to the Internet, will provide sizeable dealer profits when that high-tech industry takes off, he says.

"There are forecasts that telematics will reach 80 million vehicles in the U.S. by 2005," says Mr. Lancaster. "Think of it! Now 90% of all cellular phone calls are made from cars and trucks.

"That's a gigantic revenue stream which the automakers and their dealers will tap into, which is why I predict we'll have fixed prices on new cars across the board - and automakers will never let third parties become part of the revenue chain.

"That's because there are too many places down the road where things could be screwed up if there are too many hands in the pot."

Mr. Lancaster says he's referring to independent direct-sales web sites and possibly consolidators "if they become too focused on their own needs and not those of the brands they sell."

He says on-board communication systems could be a good marketing avenue for dealers and automakers.

"Remember, if a buyer has a portal in the car, you as a dealer and manufacturer are going to be able to send them that much more information. A car still is going to be transportation, but it will be much more."

Dealers are being transformed by the e-tailing revolution into "information-gatherers," says Mr. Lancaster.

He says the Internet revolution is something that takes place every 100 years or so.

And, breaking ranks with most dealers in a state that in 1937 adopted the first dealer franchise laws in the nation, Mr. Lancaster believes such statutes are going to be overturned if customers are adversely affected by them.

"To hide behind something that's not pro-consumer is not going to work," he contends.