31. Aug 22

The automotive retail sector must gear up for change

Car dealers need to prepare for change. More and more customers are opting to purchase their vehicles directly from the factory. Sooner or later, this will lead to changes in sales.

Digitalization has long since taken hold of large parts of the commercial world. Consumers are increasingly saving themselves a trip to the shops by ordering their goods from stores online. While many industries have already made adjustments in response to this development, one persistent exception is the automotive retail sector. We at the commercial law firm MTR Rechtsanwälte can report that, at least when it comes to purchasing new vehicles, most consumers still go to a dealer.

But change might yet be in store for the sector, including progress on the digitalization front. The internet is already the first place consumers go to look for information about vehicles as it is. Oftentimes, their purchasing decision has already been made before they have even set foot in a car dealership. If there were no legal restrictions, we would probably see a shift towards more new cars being bought online. Web portals that cater to this demand have been key players in the market for used vehicles for some time now.

Car dealers are going to have to adapt and organize themselves differently in response to this trend. Going forward, we will see digitalization forging ahead and less demand for showrooms. Marketwatch.com reports that the direct-to-consumer model is becoming ever more popular in the United States. And the coronavirus pandemic has only served to expedite this trend. The once familiar sight of hundreds of cars waiting for a buyer at the dealership is no more. Today, there are far fewer vehicles on display. Yet according to Marketwatch.com this has not affected sales, nor has it prevented prospective customers from inspecting the vehicles or taking them out for a test drive. They’re then only a few clicks away from customizing their desired model and ordering directly from the factory online.

While this does not mean that car dealerships are on track to become redundant, their role will change, with a greater focus on the workshop and servicing side of things, as well as managing recalls.

The challenge facing car dealers is the need to adapt to these changes in a timely manner. Fewer display models and less space for showcasing them will be needed, the savings from which can be put towards expanding the range of digital products and services, and adapting to perform more repair and maintenance work.

Lawyers with experience in the field of distribution law can provide counsel.

For more information:

https://www.mtrlegal.com/en/legal-advice/commercial-law/distribution-law.html

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