The traditional view of a
new car and truck dealership as the principle information resource on vehicles has changed
because of the supply-chain forces reshaping the automotive industry. How the
dealer/owners of these facilities now see them will be one of the defining elements of
industry change in the coming decade.

When the primary purpose of
dealerships was to display inventory, the physical plant was an integral part of
customers’ shopping pattern. Now, shoppers are increasingly turning to electronic
commerce or at least getting information from many sources other than dealerships.

Responding to

When dealerships were the
place for inventory storage and for vehicle delivery, a physical facility adequately
filled the needs of both shoppers and manufacturers. Dealerships were the link in the
supply chain that connected buyers to the inventory produced upstream by OEMs and
“pushed out” to the marketplace.

Manufacturers reinforced
this role by creating standards for the physical plant, including size of service areas,
location of new vehicle displays and marketing showroom and closing room space. Facility
upgrade programs were pushed into dealership capital programs and franchise renewal
agreements as ways to build a dealership body that stood out from the competition. The
OEM’s also began to inject “branding” through signage programs and template

Traditional terms used to
describe dealerships have been adjectives referring to the physical attributes; size,
location, look or age of the buildings. Local dealership advertising reinforced the
brick-and-mortar nature of dealerships with aerial views of vehicle inventory, the
building fascia or signage over rows of sparkle-lit new vehicles.

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In the 1980’s, the
attention to customer satisfaction shifted the emphasis slightly away from the mere
facility. Large groups of dealers began to highlight the people in their dealership, their
friendly service, honesty or attention to individual needs. Advertisements, however,
continued to show employees working within the dealership showroom or service department,
once again reinforcing the facility along with the people.

But during the same period,
consumers increasingly began to seek vehicle information from non-traditional means.New
Players emerged in the information sector of the supply chain. Brokers, leasing groups and
even discount stores were evolving as places for consumers to gather new vehicle
information and begin the process of considering a new vehicle purchase. Displays in
regional malls and ride-and-drive events in major cities are likely to draw potential
buyer before any visit to the dealership.

At each of these venues,
consumers are leaving their names, addresses and valuable impressions about their
lifestyles, vehicle needs and competitive considerations. For the first time, this
valuable lead information is being generated before the customer’s first dealership

The traditional method of
gathering information about vehicle shoppers was on the dealership showroom floor. It was
local, anecdotal and scattered in deal jackets, but good dealerships learned how to mine

But as today’s
customers and, therefore, the industry rapidly embrace e-commerce, Internet and electronic
marketing, the emphasis of the car-shopping experience has moved from a physical location
to tother points of access. Nonttheless, a quick review of dealership Web pages reveals
that the physical nature of those dealerships is still the major emphasis point in online
photos and text.

It should be noted,
however, that by the time customers link to an individual dealer Web site, they most
likely have entered the car-shopping experience through some non-traditional means. With
so many customers finding new avenues into the car-shopping funnel, dealers can no longer
afford to be defined by traditional images.

Formulating a New Definition

Electronic access has
redefined the dealership link in the supply chain as a place to order vehicles rather than
shop for them or find information about them.

In the electronic age, the
fact that dealerships have new vehicles in stock is not an advantage but rather it is a
cost–unless the vehicle matches customer wants precisely. In fact, if the dealership does
not collect information about consumers’ wants, needs and cross considerations better
than any other entity, then does the dealership have potential for servicing more than
vehicle sales?

The dramatic redefinition
of dealerships is occurring because customers now get what they want–in the form of
information–when they want it.

The fact that the other
information sources, particularly the electronic ones through OEM Web pages, insurance
company Web sites or enthusiast magazines are replacing the importance of the dealership
site should be of concern. But the fact that they might replace dealerships in the
value-adding activity or gathering information about car and truck buyers’ needs and
demographics should be alarming.

Dealerships’ role in
inventory is diminishing, but their role information gathering has never been more
strategic to the ability to build relationships and generate profits.