The Incredible Shrinking Car Dealership

People don't like car dealerships. It is hard to shake the feeling that someone is getting a raw deal. Honda is rethinking every aspect of the purchase process, including the spaces in which it happens, as the auto industry increasingly goes electric and moves online.

Honda is rolling out a new dealership design that takes up less square footage and is modular and flexible, which can be used to transform showroom space into offices for employees. The company aims to sell half a million electric vehicles in the US by the year 2030. He says that recent experiences have taught the automaker that selling cars will not require as much space.

The shift is a reflection of the Pandemic. There is a shortage of chips for cars that need hundreds and sometimes more than a thousand of them to work. New car dealers don't have as many vehicles to show off to customers because of the supply chain problem. Big automakers started experimenting with letting customers reserve and buy their cars online as a result of a new breed of electric direct sales companies. Ford took online reservations for its electric pickup truck and made its first sales of the car on the internet. Volvo said last year that it will sell all of its electric vehicles online by the year 2030.

The dealership does not need to be a place like Taj Mahal.

Mike Anderson is a member of the Rikess Group.

It makes buying and selling cars easier. Building cars to fulfill customers online means fewer unpopular models end up being sold at a discount on showroom floors.

This adjustment has not always worked out for car buyers. The combination of a tight car market and limited inventory means that dealers can't offer as many discounts to customers as they would like. Buyers pay more and dealers make more money. Industry experts are divided on whether the public health emergency and related supply chain struggles will last.

The president of the Rik says that the era of rows and rows of makes and models may be over. Dealerships that Anderson advises have begun to bring vehicles to potential customers for test drives, and then back to their homes or offices when they close the deal. Ford, Mercedes-Benz, and BMW are experimenting with mobile servicing or having technicians travel to customers' vehicles. Many of the guests won't see the dealership in some places.

It could take years or even decades for a dealership to change its look. The new dealership design is not a program Honda wants dealers to adopt, but a direction Honda wants them to follow. Volkswagen of America network operation vice president Brian Kelly says the automaker is considering similar changes.