Car dealerships could be out of business within a decade, says report
Meegan Read CBC News
Last Updated:Jun 13, two thousand seventeen Ten:25 AM ET
A fresh report suggests people will be willing to part with their vehicles if it saves them thousands of dollars a year. That could spell disaster for car dealerships across the continent. Jason Alden/Bloomberg
Related
Related Stories
The time-honoured tradition of buying a shiny fresh sports car or a chrome-lined pickup truck from a lot may no longer exist a decade from now, according to a fresh report that paints a bleak future for auto dealerships in North America.
According to a investigate from RethinkX, an independent think-tank in San Francisco, greater request for electrified cars, coupled with enhanced request for rail sharing, will eventually eliminate the need for dealerships altogether.
‘It’s the radically lower cost that we think truly drives the speed and the adoption scale of this disruption we’re forecasting.’ – James Arbib , RethinkX
The authors of the report — technology investor James Arbib and Stanford University economist Tony Seba — aren’t the very first to prognosticate the death of dealerships, but it is the speed with which they think it will happen that is notable.
They believe it will occur in the next seven years.
It’s the “radically lower cost” of ride-sharing and electrical vehicles that “truly drives the speed and the adoption scale of this disruption we’re forecasting,” said Arbib.
A simpler power train
Electrified cars may be comparatively expensive right now, but Arbib and Seba believe in the long run, they will be cheaper to operate than their gas-powered equivalents.
They estimate the tipping point will occur once the electrified vehicle battery range surpasses three hundred twenty kilometres and electrical car prices drop to the $20,000-dollar range. Presently, a low-end electrified vehicle costs somewhere in the $30,000 range.
According to the Canadian Automobile Association, the average cost of maintenance and repair on a gas or diesel car is just over $1,000 per year. (David Goldman/Associated Press)
Arbib and Seba believe that due to the composition of an electrified engine, people will spend less time bringing in their cars to dealerships for repairs and servicing.
“You only have twenty moving parts in the power train of an electrified vehicle, but Two,000 in the power train of a gasoline vehicle, so there is far less to go wrong,” said Arbib.
According to the Canadian Automobile Association, the average cost of maintenance and repair on a gas-powered car is just over $1,000 per year, or seven cents per kilometre. This number goes up depending on the age of the vehicle and distance travelled.
Electrical vehicles could last longer. Right now, Tesla is suggesting infinite kilometre warranties. Arbib expects the lifetime of these vehicles to be about 800,000 kilometres in the early 2020s, and potentially more than 1.Five million by the end of that decade.
Industry thriving
The RethinkX report comes at a time when auto sales in Canada have been flourishing and employment at dealerships is climbing. Dealership jobs surpassed 150,000 during the very first quarter of this year.
Doug Heeney, fleet sales manager at Campbell Ford in Ottawa, says business has never been better.
Tesla shipped 25,000 vehicles in the very first quarter of 2017, its best three-month period ever. (Stephen Lam/Reuters)
While he believes electrified vehicles are the natural progression of the auto industry, he doesn’t see them taking over. “It’s going to be a percentage of our industry, but I don’t think the electrified vehicle, especially in Canada, is going to overtake or eliminate the current vehicles we’ve got for sale,” he said.
Automotive experts agree that all roads lead to electrical, but the road there could be long and winding.
“There are some serious question marks and a lot of assumptions in the report,” said Dennis DesRosiers, an Ontario-based auto industry analyst.
His main problem with RethinkX’s forecast is the assumption about massive cost reductions in the building and operation of electrical vehicles. That hasn’t happened yet.
Other bold predictions
DesRosiers likens this report to the mass optimism around hybrid vehicles. When they were introduced seventeen years ago, the thinking was they would account for half of the cars sold by 2020.
“The reality is, after seventeen years, they account for less than one per cent, with sales in the last four years going down,” DesRosiers said.
That’s why he doesn’t think dealerships will soon join the list of businesses lost to advancing technology, like movie rental stores.
Many wild predictions have been made in latest decades about how the auto industry would switch overnight.
Reminisce Priceline? Originally known for its Name-Your-Own-Price system with regard to travel, it attempted to apply the same model to buying gasoline back in 2000, at the height of the dot-com bubble.
Customers were going to be able to save up to ten cents per gallon off the pump price. This U.S. experiment ran out of gas in less than two months, because consumers weren’t willing to spend the time it took to look online for meagre cost savings.
You may also recall General Motors betting big on Saturn. Originally marketed as a different kind of car, with no-haggle pricing, the brand was set up to hit back foreign competition.
GM stopped building them 2010, after the line was plagued by cost and production issues.
Certain about switch
Arbib and Seba are nonetheless certain of their forecast, and believe that switching attitudes to car ownership will ultimately imperil dealerships.
Again, it all comes down to economics. According to their report, “Using transport as a service will be four to ten times cheaper per mile than buying a fresh car, and two to four times cheaper than operating an existing paid-off vehicle by 2020.”
It will basically be cheaper to ride-share than keep a car (or two) in your garage.
“The cost of savings for an average American family is likely to be about $6,000 a year, a substantial increase in disposable income,” said Arbib.
RethinkX’s seven-year timeline for the extinction of dealerships may feel a bit too soon for those who can’t comprehend not wielding their own car, but Arbib insists the switch is coming quicker than you might expect.
“You only have to speak to Nokia or Kodak to see examples of companies that have fallen by the wayside, taken by surprise by the scale and speed of these disruptions.”
CBC News – Car dealerships could be out of business within a decade, says report
Car dealerships could be out of business within a decade, says report
Meegan Read CBC News
Last Updated:Jun 13, two thousand seventeen Ten:25 AM ET
A fresh report suggests people will be willing to part with their vehicles if it saves them thousands of dollars a year. That could spell disaster for car dealerships across the continent. Jason Alden/Bloomberg
Related
Related Stories
The time-honoured tradition of buying a shiny fresh sports car or a chrome-lined pickup truck from a lot may no longer exist a decade from now, according to a fresh report that paints a bleak future for auto dealerships in North America.
According to a examine from RethinkX, an independent think-tank in San Francisco, greater request for electrical cars, coupled with enhanced request for rail sharing, will eventually eliminate the need for dealerships altogether.
‘It’s the radically lower cost that we think truly drives the speed and the adoption scale of this disruption we’re forecasting.’ – James Arbib , RethinkX
The authors of the report — technology investor James Arbib and Stanford University economist Tony Seba — aren’t the very first to prognosticate the death of dealerships, but it is the speed with which they think it will happen that is notable.
They believe it will occur in the next seven years.
It’s the “radically lower cost” of ride-sharing and electrical vehicles that “truly drives the speed and the adoption scale of this disruption we’re forecasting,” said Arbib.
A simpler power train
Electrical cars may be comparatively expensive right now, but Arbib and Seba believe in the long run, they will be cheaper to operate than their gas-powered equivalents.
They estimate the tipping point will occur once the electrified vehicle battery range surpasses three hundred twenty kilometres and electrical car prices drop to the $20,000-dollar range. Presently, a low-end electrified vehicle costs somewhere in the $30,000 range.
According to the Canadian Automobile Association, the average cost of maintenance and repair on a gas or diesel car is just over $1,000 per year. (David Goldman/Associated Press)
Arbib and Seba believe that due to the composition of an electrified engine, people will spend less time bringing in their cars to dealerships for repairs and servicing.
“You only have twenty moving parts in the power train of an electrical vehicle, but Two,000 in the power train of a gasoline vehicle, so there is far less to go wrong,” said Arbib.
According to the Canadian Automobile Association, the average cost of maintenance and repair on a gas-powered car is just over $1,000 per year, or seven cents per kilometre. This number goes up depending on the age of the vehicle and distance travelled.
Electrical vehicles could last longer. Right now, Tesla is suggesting infinite kilometre warranties. Arbib expects the lifetime of these vehicles to be about 800,000 kilometres in the early 2020s, and potentially more than 1.Five million by the end of that decade.
Industry thriving
The RethinkX report comes at a time when auto sales in Canada have been flourishing and employment at dealerships is climbing. Dealership jobs surpassed 150,000 during the very first quarter of this year.
Doug Heeney, fleet sales manager at Campbell Ford in Ottawa, says business has never been better.
Tesla shipped 25,000 vehicles in the very first quarter of 2017, its best three-month period ever. (Stephen Lam/Reuters)
While he believes electrical vehicles are the natural progression of the auto industry, he doesn’t see them taking over. “It’s going to be a percentage of our industry, but I don’t think the electrical vehicle, especially in Canada, is going to overtake or eliminate the current vehicles we’ve got for sale,” he said.
Automotive experts agree that all roads lead to electrified, but the road there could be long and winding.
“There are some serious question marks and a lot of assumptions in the report,” said Dennis DesRosiers, an Ontario-based auto industry analyst.
His main problem with RethinkX’s forecast is the assumption about massive cost reductions in the building and operation of electrified vehicles. That hasn’t happened yet.
Other bold predictions
DesRosiers likens this report to the mass optimism around hybrid vehicles. When they were introduced seventeen years ago, the thinking was they would account for half of the cars sold by 2020.
“The reality is, after seventeen years, they account for less than one per cent, with sales in the last four years going down,” DesRosiers said.
That’s why he doesn’t think dealerships will soon join the list of businesses lost to advancing technology, like movie rental stores.
Many wild predictions have been made in latest decades about how the auto industry would switch overnight.
Reminisce Priceline? Originally known for its Name-Your-Own-Price system with regard to travel, it attempted to apply the same model to buying gasoline back in 2000, at the height of the dot-com bubble.
Customers were going to be able to save up to ten cents per gallon off the pump price. This U.S. experiment ran out of gas in less than two months, because consumers weren’t willing to spend the time it took to look online for meagre cost savings.
You may also recall General Motors betting big on Saturn. Originally marketed as a different kind of car, with no-haggle pricing, the brand was set up to hit back foreign competition.
GM stopped building them 2010, after the line was plagued by cost and production issues.
Certain about switch
Arbib and Seba are nonetheless certain of their forecast, and believe that switching attitudes to car ownership will ultimately imperil dealerships.
Again, it all comes down to economics. According to their report, “Using transport as a service will be four to ten times cheaper per mile than buying a fresh car, and two to four times cheaper than operating an existing paid-off vehicle by 2020.”
It will basically be cheaper to ride-share than keep a car (or two) in your garage.
“The cost of savings for an average American family is likely to be about $6,000 a year, a substantial increase in disposable income,” said Arbib.
RethinkX’s seven-year timeline for the extinction of dealerships may feel a bit too soon for those who can’t comprehend not possessing their own car, but Arbib insists the switch is coming quicker than you might expect.
“You only have to speak to Nokia or Kodak to see examples of companies that have fallen by the wayside, taken by surprise by the scale and speed of these disruptions.”
CBC News – Car dealerships could be out of business within a decade, says report
Car dealerships could be out of business within a decade, says report
Meegan Read CBC News
Last Updated:Jun 13, two thousand seventeen Ten:25 AM ET
A fresh report suggests people will be willing to part with their vehicles if it saves them thousands of dollars a year. That could spell disaster for car dealerships across the continent. Jason Alden/Bloomberg
Related
Related Stories
The time-honoured tradition of buying a shiny fresh sports car or a chrome-lined pickup truck from a lot may no longer exist a decade from now, according to a fresh report that paints a bleak future for auto dealerships in North America.
According to a examine from RethinkX, an independent think-tank in San Francisco, greater request for electrified cars, coupled with enhanced request for rail sharing, will eventually eliminate the need for dealerships altogether.
‘It’s the radically lower cost that we think truly drives the speed and the adoption scale of this disruption we’re forecasting.’ – James Arbib , RethinkX
The authors of the report — technology investor James Arbib and Stanford University economist Tony Seba — aren’t the very first to prognosticate the death of dealerships, but it is the speed with which they think it will happen that is notable.
They believe it will occur in the next seven years.
It’s the “radically lower cost” of ride-sharing and electrified vehicles that “indeed drives the speed and the adoption scale of this disruption we’re forecasting,” said Arbib.
A simpler power train
Electrical cars may be comparatively expensive right now, but Arbib and Seba believe in the long run, they will be cheaper to operate than their gas-powered equivalents.
They estimate the tipping point will occur once the electrical vehicle battery range surpasses three hundred twenty kilometres and electrified car prices drop to the $20,000-dollar range. Presently, a low-end electrified vehicle costs somewhere in the $30,000 range.
According to the Canadian Automobile Association, the average cost of maintenance and repair on a gas or diesel car is just over $1,000 per year. (David Goldman/Associated Press)
Arbib and Seba believe that due to the composition of an electrical engine, people will spend less time bringing in their cars to dealerships for repairs and servicing.
“You only have twenty moving parts in the power train of an electrical vehicle, but Two,000 in the power train of a gasoline vehicle, so there is far less to go wrong,” said Arbib.
According to the Canadian Automobile Association, the average cost of maintenance and repair on a gas-powered car is just over $1,000 per year, or seven cents per kilometre. This number goes up depending on the age of the vehicle and distance travelled.
Electrified vehicles could last longer. Right now, Tesla is suggesting infinite kilometre warranties. Arbib expects the lifetime of these vehicles to be about 800,000 kilometres in the early 2020s, and potentially more than 1.Five million by the end of that decade.
Industry thriving
The RethinkX report comes at a time when auto sales in Canada have been thriving and employment at dealerships is climbing. Dealership jobs surpassed 150,000 during the very first quarter of this year.
Doug Heeney, fleet sales manager at Campbell Ford in Ottawa, says business has never been better.
Tesla shipped 25,000 vehicles in the very first quarter of 2017, its best three-month period ever. (Stephen Lam/Reuters)
While he believes electrical vehicles are the natural progression of the auto industry, he doesn’t see them taking over. “It’s going to be a percentage of our industry, but I don’t think the electrified vehicle, especially in Canada, is going to overtake or eliminate the current vehicles we’ve got for sale,” he said.
Automotive experts agree that all roads lead to electrified, but the road there could be long and winding.
“There are some serious question marks and a lot of assumptions in the report,” said Dennis DesRosiers, an Ontario-based auto industry analyst.
His main problem with RethinkX’s forecast is the assumption about massive cost reductions in the building and operation of electrical vehicles. That hasn’t happened yet.
Other bold predictions
DesRosiers likens this report to the mass optimism around hybrid vehicles. When they were introduced seventeen years ago, the thinking was they would account for half of the cars sold by 2020.
“The reality is, after seventeen years, they account for less than one per cent, with sales in the last four years going down,” DesRosiers said.
That’s why he doesn’t think dealerships will soon join the list of businesses lost to advancing technology, like movie rental stores.
Many wild predictions have been made in latest decades about how the auto industry would switch overnight.
Reminisce Priceline? Originally known for its Name-Your-Own-Price system with regard to travel, it attempted to apply the same model to buying gasoline back in 2000, at the height of the dot-com bubble.
Customers were going to be able to save up to ten cents per gallon off the pump price. This U.S. experiment ran out of gas in less than two months, because consumers weren’t willing to spend the time it took to look online for meagre cost savings.
You may also recall General Motors betting big on Saturn. Originally marketed as a different kind of car, with no-haggle pricing, the brand was set up to hit back foreign competition.
GM stopped building them 2010, after the line was plagued by cost and production issues.
Certain about switch
Arbib and Seba are nonetheless certain of their forecast, and believe that switching attitudes to car ownership will ultimately imperil dealerships.
Again, it all comes down to economics. According to their report, “Using transport as a service will be four to ten times cheaper per mile than buying a fresh car, and two to four times cheaper than operating an existing paid-off vehicle by 2020.”
It will basically be cheaper to ride-share than keep a car (or two) in your garage.
“The cost of savings for an average American family is likely to be about $6,000 a year, a substantial increase in disposable income,” said Arbib.
RethinkX’s seven-year timeline for the extinction of dealerships may feel a bit too soon for those who can’t comprehend not possessing their own car, but Arbib insists the switch is coming quicker than you might expect.
“You only have to speak to Nokia or Kodak to see examples of companies that have fallen by the wayside, taken by surprise by the scale and speed of these disruptions.”
CBC News – Car dealerships could be out of business within a decade, says report
Car dealerships could be out of business within a decade, says report
Meegan Read CBC News
Last Updated:Jun 13, two thousand seventeen Ten:25 AM ET
A fresh report suggests people will be willing to part with their vehicles if it saves them thousands of dollars a year. That could spell disaster for car dealerships across the continent. Jason Alden/Bloomberg
Related
Related Stories
The time-honoured tradition of buying a shiny fresh sports car or a chrome-lined pickup truck from a lot may no longer exist a decade from now, according to a fresh report that paints a bleak future for auto dealerships in North America.
According to a investigate from RethinkX, an independent think-tank in San Francisco, greater request for electrical cars, coupled with enlargened request for rail sharing, will eventually eliminate the need for dealerships altogether.
‘It’s the radically lower cost that we think indeed drives the speed and the adoption scale of this disruption we’re forecasting.’ – James Arbib , RethinkX
The authors of the report — technology investor James Arbib and Stanford University economist Tony Seba — aren’t the very first to prognosticate the death of dealerships, but it is the speed with which they think it will happen that is notable.
They believe it will occur in the next seven years.
It’s the “radically lower cost” of ride-sharing and electrical vehicles that “indeed drives the speed and the adoption scale of this disruption we’re forecasting,” said Arbib.
A simpler power train
Electrified cars may be comparatively expensive right now, but Arbib and Seba believe in the long run, they will be cheaper to operate than their gas-powered equivalents.
They estimate the tipping point will occur once the electrified vehicle battery range surpasses three hundred twenty kilometres and electrified car prices drop to the $20,000-dollar range. Presently, a low-end electrical vehicle costs somewhere in the $30,000 range.
According to the Canadian Automobile Association, the average cost of maintenance and repair on a gas or diesel car is just over $1,000 per year. (David Goldman/Associated Press)
Arbib and Seba believe that due to the composition of an electrical engine, people will spend less time bringing in their cars to dealerships for repairs and servicing.
“You only have twenty moving parts in the power train of an electrical vehicle, but Two,000 in the power train of a gasoline vehicle, so there is far less to go wrong,” said Arbib.
According to the Canadian Automobile Association, the average cost of maintenance and repair on a gas-powered car is just over $1,000 per year, or seven cents per kilometre. This number goes up depending on the age of the vehicle and distance travelled.
Electrical vehicles could last longer. Right now, Tesla is suggesting infinite kilometre warranties. Arbib expects the lifetime of these vehicles to be about 800,000 kilometres in the early 2020s, and potentially more than 1.Five million by the end of that decade.
Industry thriving
The RethinkX report comes at a time when auto sales in Canada have been thriving and employment at dealerships is climbing. Dealership jobs surpassed 150,000 during the very first quarter of this year.
Doug Heeney, fleet sales manager at Campbell Ford in Ottawa, says business has never been better.
Tesla shipped 25,000 vehicles in the very first quarter of 2017, its best three-month period ever. (Stephen Lam/Reuters)
While he believes electrical vehicles are the natural progression of the auto industry, he doesn’t see them taking over. “It’s going to be a percentage of our industry, but I don’t think the electrical vehicle, especially in Canada, is going to overtake or eliminate the current vehicles we’ve got for sale,” he said.
Automotive experts agree that all roads lead to electrical, but the road there could be long and winding.
“There are some serious question marks and a lot of assumptions in the report,” said Dennis DesRosiers, an Ontario-based auto industry analyst.
His main problem with RethinkX’s forecast is the assumption about massive cost reductions in the building and operation of electrified vehicles. That hasn’t happened yet.
Other bold predictions
DesRosiers likens this report to the mass optimism around hybrid vehicles. When they were introduced seventeen years ago, the thinking was they would account for half of the cars sold by 2020.
“The reality is, after seventeen years, they account for less than one per cent, with sales in the last four years going down,” DesRosiers said.
That’s why he doesn’t think dealerships will soon join the list of businesses lost to advancing technology, like movie rental stores.
Many wild predictions have been made in latest decades about how the auto industry would switch overnight.
Reminisce Priceline? Originally known for its Name-Your-Own-Price system with regard to travel, it attempted to apply the same model to buying gasoline back in 2000, at the height of the dot-com bubble.
Customers were going to be able to save up to ten cents per gallon off the pump price. This U.S. experiment ran out of gas in less than two months, because consumers weren’t willing to spend the time it took to look online for meagre cost savings.
You may also recall General Motors betting big on Saturn. Originally marketed as a different kind of car, with no-haggle pricing, the brand was set up to strike back foreign competition.
GM stopped building them 2010, after the line was plagued by cost and production issues.
Certain about switch
Arbib and Seba are nonetheless certain of their forecast, and believe that switching attitudes to car ownership will ultimately imperil dealerships.
Again, it all comes down to economics. According to their report, “Using transport as a service will be four to ten times cheaper per mile than buying a fresh car, and two to four times cheaper than operating an existing paid-off vehicle by 2020.”
It will basically be cheaper to ride-share than keep a car (or two) in your garage.
“The cost of savings for an average American family is likely to be about $6,000 a year, a substantial increase in disposable income,” said Arbib.
RethinkX’s seven-year timeline for the extinction of dealerships may feel a bit too soon for those who can’t comprehend not wielding their own car, but Arbib insists the switch is coming quicker than you might expect.
“You only have to speak to Nokia or Kodak to see examples of companies that have fallen by the wayside, taken by surprise by the scale and speed of these disruptions.”
No comments