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How will dealerships be affected by autonomous vehicles?

Abstract vehicle
Article Highlights:

  • It's predicted 8% of U.S. new vehicle sales will be autonomous by 2035.
  • Fleet operators will emerge as a new customer for dealerships.

A Deloitte report has predicted 8% of new vehicles sold in the U.S. by 2035 will be autonomous vehicles. This figure jumps to 59% in the more extreme case, which involves technology and consumer willingness to purchase greatly exceeding projections.

Despite various expert predictions, no one can fully predict how the future will unfold when it comes to autonomous vehicles. However, understanding the present situation and potential developments will keep you well-versed and optimized for success. So you may be asking, how will this emerging technology affect my dealership and the rest of the auto industry? It’s first important to understand the current landscape of autonomous vehicle development. Below is an infographic from the same Deloitte report.

Currently, most OEMs are focused on making breakthroughs in levels 2-4 of this model. But, the playing field isn’t even, since some manufacturers have had a head start. For example, Tesla is already producing vehicles at level 2 along with GM, Ford, and others. This arms race for autonomous vehicles is predicted to spill out into the market around 2035, where level 4 and 5 autonomous vehicles might be introduced. And there is potential along the way to stimulate increased business resulting in a huge positive effect on dealerships.

A New Customer: Fleet Operators

Fleet operators buy large quantities of cars with the objective of owning them instead of selling them. With the emergence of more autonomous vehicles, we may see companies like Uber buying up to tens of thousands of autonomous vehicles as part of their ride-sharing program. This provides a great opportunity for dealerships at the corporate and even local levels with these potential mega-fleet operators. This equates to vehicle sales from two revenue sources: private ownership and fleet operators.

Increase in Vehicle Sales  

Assuming fleet operators will buy from dealerships, dealerships will continue to find success entering the new age of vehicles. Mark Barrot, a director in the Mobility Intelligence Center at Plante Moran, predicts that autonomous vehicles will bring increased vehicle sales for dealerships. Additionally, autonomous vehicles purchased by fleet operators will be heavily utilized. This will create a shorter vehicle life cycle, increasing the need for service and new vehicle sales. Another interesting prediction concerns car insurance. With autonomous vehicles providing a massive increase in vehicle safety, auto-insurance premiums will increase significantly. This could further promote vehicle sales from the private sector, supplementing the revenue increases dealerships may see.

Increase in Aftermarket Sales

With innovative technology fueling and accompanying the development of autonomous vehicles, the opportunity for increased revenue in aftermarket purchases at the dealership may present itself. Depending on the baseline functionality of the vehicle, dealerships could mark up each additional level of autonomy for a vehicle until it reaches level 5. Assuming there will be other impressive technological developments to accompany the self-driving technology, there could be great opportunities for the sales and F&I teams to upsell customers.

The emergence of autonomous vehicles could open new doors for dealerships. While these changes will take years to come to fruition, there are tangible actions your dealership can take right now to better your position for the future. Famous racecar driver Bobby Unser once said, “Success is where preparation and opportunity meet.” Stay tuned for my next article in this series where I will touch on tangible steps dealerships can take now to create an environment for present and future success.

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Brand Marketing, Vice President, Reynolds and Reynolds

Greg Uland is the vice president of brand marketing for Reynolds and Reynolds. He is responsible for customer communications and understanding and defining Reynolds unique position in the automotive retailing market. During his career with Reynolds, he has established a background in fixed operations, sales, and dealership marketing.

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