Auto recycling might be on the newer side when it comes to the evolution of car dealerships, but there is a wealth of information about how car dealerships started and then progressed through the years. In fact, the average car dealership in the U.S. will evolve over the next 10 years.
While there is change going on at the most basic level, this isn’t something that’s going to overthrow the current business model. Rather, this will be something like an augmentation to the already existing system. Let’s take a look at how car dealerships have evolved over the years and in the process figure out where we’re headed next.
Just recently, Elon Musk has created a disruptive car that he calls the Model S. He’s come into direct conflict with car dealerships and other entities because of the fact that he sells for a fixed price and sells his cars directly to his customers instead of brokering them through the world of the dealership.
When you look back at history, you see a variety of reasons why this practice happens even up to today in modern car selling. In fact, these practices date back to the beginning of the automobile and even before that. General Motors’ General Motors Acceptance Corporation allowed for consumer loans, monthly payment plans, and a variety of other services.
This happened in 1919 just as General Motors was doing their best to combat Henry Ford and his chokehold on the market. Since Henry Ford didn’t believe in credit (at least at first), his domination dissipated and the edge started turning in GM’s favor.
Up until 1898, there were no used car lots in existence. That all changed when the Empire State Motor Wagon Company created the first used car lot. It can be imagined that there weren’t many cars on offer since the automobile was only three years old at the time, but this was still a breakthrough in the automotive world.
Leasing the Horse-drawn Wagon
While it seems like leasing is a more modern phenomenon, it actually predates the car itself. Leasing first originated in the 1700s as a way to more easily sell the horse-drawn wagon. It’s with this concept of the lease that the automotive industry was able to thrive and flourish.
The practice of no haggling when it comes to car dealership interactions became a thing of the past with the advent of the internet. It was then that car buyers began conducting more research and figuring out what features they wanted in a car before hand.
They could also shop around before actually stepping foot in a dealership and then figure out which dealership offered the best prices. All of this to try to haggle over the price of the car and get it down to a manageable number.
In fact, now some dealerships consider that the buyer is engaged in a sale right when they’re in research mode and figuring out info online. People will often have price, features, value of a trade, and their potential for getting financing all down before they even step foot in a car dealership.
Also, it used to be the case that customers would come into a car dealership with the information they have being used as something like a roadblock to the transaction. Now, customers are using this information more to expedite the entire transaction process.
This whole shift toward transparency has by and large improved the entire process for both the buyer and the dealer, as it has streamlined the whole process of the deal and made it more conducive toward understanding as opposed to confrontation.
While the future of car dealerships remains to be seen, we can look to the past in order to try to peer into the future. The car dealership had a modest beginning, but you can see that a lot of the modern aspects of the automotive industry had already been in place even before the auto industry.
If you look at the fact that leases existed before the car or that used lots first started in the late 1890s, you see that this was an industry that had a lot of its infrastructure set up long before the modern age.