The auto retailing industry could see tremendous changes between now and 2030, according to Mark O’Neil, chief operating officer (COO) of automotive services and software firm Cox Automotive.
At the company’s recent mid-year review in Detroit, O’Neil said trends indicate that average household vehicle ownership will drop substantially in coming years, perhaps from two vehicles per household to one. “People would have the need for two cars,” he said, “but they would only own one. They would turn to ride-sharing or subscription services for the other.”
Changes in vehicle ownership patterns will result in fewer dealerships or “rooftops”; a graph in O’Neil’s presentation showed franchise rooftops dropping from 18,000 in 2017 to 9,000 in 2030.
A the same time, dealership consolidation will result in fewer owners controlling larger car retail groups. “There are about 9,000 owners now,” O’Neil said. “By 2030, we think there will be 1,000. That’s drastic. As groups consolidate, rooftops close. Single-point urban dealers are at high risk.”
In his presentation, O’Neil referred to a report on transportation disruption from research firm RethinkX, which predicts that autonomous electric vehicles (A-EVs) will bring about “a historic revolution in transportation, [ending] over 100 years of individual vehicle ownership and [reshaping] the world’s energy economy in the process.”
The RethinkX research is predicated on “the regulatory approval of driverless vehicles.” But within 10 years of such approval, the firm believes, “95 percent of U.S. passenger miles traveled will be served by on-demand Autonomous Electric Vehicles (A-EVs) owned by companies providing Transport as a Service (TaaS).” Such vehicles, the report claimed, will constitute 60 percent of vehicle stock in the U.S.
For such a scenario, Cox analysts think dealership businesses should begin to seek out new business models, such as vehicle subscription services and fleet maintenance. “All of us have to adopt business models for this new environment,” O’Neil said.
