1、Chronic supply shortages of new vehicles,the transi-tion from internal combustion engines(ICEs)to electric vehicles(EVs),and the emergence of new digital retail business models are all radically changing the ways vehicles are being brought to market.Moreover,they are occurring at a time of mounting

2、concerns that much of the global economy may be heading into recession.The implications are enormous for brick-and-mortar deal-erships.Business models that have traditionally revolved around having ample stocks of cars on their lots and con-ducting business primarily in physical showrooms will have

3、to adapt to supply scarcity.Companies will have to begin engaging with car buyers online.And because EVs require fewer repairs and less servicing,dealers will also have to develop new revenue streams.Dealerships that learn to skillfully navigate this new go-to-market landscape will emerge as the win

4、ners in the years ahead.Our research found that US dealers are confident they will successfully navigate this transformation.They believe that brick-and mortar dealerships will remain the primary channels for purchasing vehicles.They also believe that neither new EV OEMs nor digital marketplaces sel

5、ling directly to consumers will pose serious competitive threats or undermine their business models.We also found,however,that many US dealers may not be adequately preparing for the challenges ahead.They are taking some steps in the right direction,such as by build-ing new digital capabilities to e

6、ngage with customers out-side of showrooms and investing in training and new equipment to support EVs.But dealers are underestimat-ing the speed of the transition to EVs.And many arent making the really big digital push needed to successfully compete with the new players.Chip shortages and pandemic

7、factory lockdowns have dominated headlines in the automotive industry around the world for several turbulent years.Less noticed has been a wave of disruption that is transforming another part of the industrythe retail sector.The impact of this disruption will be felt throughout the automotive ecosys

8、tem.Are US Car Dealers Ready for Tomorrow?By Karen Lellouche Tordjman,Augustin K.Wegscheider,Mathieu Nemoz-Guillot,and Eric JesseFor 81%of dealers,inventory shortages constitute the most serious challenge.BOSTON CONSULTING GROUP 3The Supply Crunch and Inflation Will LingerTo get a sense of how struc

9、tural changes in automotive retail are playing out around the world,Boston Consulting Group conducted research in major markets during the past year.This article focuses on the US,but the trends we observed,and their implications,are similar in other markets.We surveyed more than 350 US auto dealers

10、,ranging from small,independent outlets to large franchisees.We asked about their outlook for the US auto market;how supply constraints,digital retailing,and the EV shift are affecting their businesses;and how theyre preparing to meet these challenges.We also surveyed more than 550 consumers who had

11、 recently purchased a vehicle.This research,com-bined with our work on more than 500 automotive cases with clients over the past few years,provides a unique perspective on how the industry is evolving.Looking ahead,81%of dealers see inventory shortages as their most serious challenge for the next tw

12、o to three years.The expectation that OEMs wont be able to manu-facture enough light vehicles to meet strong US demand is supported by BCG research.In 2021,we estimated that around 10 million vehicles globally were not produced and sold because of the semiconductor shortage.This has reset expectatio

13、ns in the auto industry.We project at least 9 million such lost sales in 2022 and that supply and demand wont return to balance until 2024.Whats more,dealers report that 59%of the new cars they sell are now built to orderas opposed to just 19%in 2019.(See Exhibit 1.)If this trend holds,it will const

14、itute a retail paradigm shift.Traditionally,US buyers would drive their cars home off the lot after purchasing them in showrooms.Due to inventory shortages,however,buyers now often must wait months before OEMs can fill their orders.That means more time to customize vehiclesand opportunities for US d

15、ealers to make higher margins by adding and upselling features.It also means that dealers can charge at or above the manufacturers suggested retail prices rather than offer discounts for inventory sitting on the lot.Seventy percent of dealers also believe that the current pricing environment,in whic

16、h dealers have been able to mark up prices above the manufacturers suggested retail price,wont last.Thats partly due to recession fears as well as the fact that OEMs have been demanding that dealers stop such practicesand are increasing prices themselves to offset rising costs and boost profits.Stil

17、l,nearly two-thirds of dealers dont expect prices to return to pre-2020 levels,when sizable incentives and discounts were com-mon,for at least two or three years.(See Exhibit 2.)“What is your biggest challenge in the next 23 years?”Share of respondents(%)“How many of the new cars you sell are built

18、to order?”Share of respondents(%)766Staffing and labor costOther9+40ppNear-term recessionSustainable supply81Source:BCG analysis.Exhibit 1-Tight Supplies Are Shifting the Sales Focus to Preorders4 ARE US CAR DEALERS READY FOR TOMORROW?Preparing for the EV AgeIn BCGs 2022 report on electri

19、c cars,we forecast that EVs will account for 19%of light vehicles sold globally by 2025 and for 47%by 2030.In fact,BCG has revised its annual forecasts for EV adoption upward over the past few years because OEMs have increased their commitments to EV production capacity and accelerated the timetable

20、s for phasing out ICEs.But our study found that US dealers may be underprepared for the EV age.Dealers said they expect that vehicles pow-ered entirely by rechargeable batteries will account for only 12%of light-vehicle sales in 2025 and 26%in 2030about half of what we project.Maintenance and servic

21、e currently are major sources of revenue for dealerships.But the fact that EVs require less maintenance than ICEs will significantly affect their busi-ness model.Dealers recognize this challenge.Forty-seven percent of respondents indicated that they expect EVs to have a negative impact on profits pe

22、r sale;51%think servicing of EVs will be less profitable.These sentiments also align with BCG research.Although EV tires will likely need to be replaced more frequently,due to the vehicles heavier weight and faster acceleration,EVs have far fewer mechanical parts than ICEs.Those parts also last long

23、er on average before they need to be replaced.EVs require only about half as much maintenance due to wear and tear and servicing of the motor and drivetrain,for example.We forecast that annual parts costs for EVs will be about 20%lower than those for comparable ICE vehicles.The shift to EVs is also

24、likely to put further pressure on the margins of brick-and-mortar dealerships,accelerating consolidation in the retail sector as scale becomes more critical.OEMs are asking dealers to make sizable invest-ments to support EVs.Ford Motor,for example,recently announced that it expects dealers to add in

25、frastructure,such as charging stations,and employ digital commerce if they are to sell its EVs.General Motors(GM)is taking similar measures with its Cadillac franchisees,while its Buick division is going so far as to buy out dealers unwill-ing to invest in EVs.Many smaller dealersthose with fewer th

26、an five loca-tions,or“rooftops”will be hard-pressed to make such investments in addition to coping with declining repair revenue.Many appear to acknowledge the new realities:about one in 25 dealers in our study indicated that they are considering selling out to a larger dealer group within the next

27、three years.Indeed,BCG forecasts that the num-ber of dealer rooftops in the US will shrink by 14%to around 14,300by 2034.“Do you think the current new car pricing environmentwith dealer markups above MSRP is here to stay?”Share of respondents(%)“If no,do you expect prices to return to pre-2020 level

28、sof incentives and discounts in the next 23 years?”Share of respondents(%)26Yes4No70Do not know3364NoYesDo not know4Source:BCG analysis.Exhibit 2-High Markups Wont Last,But Prices Are Unlikely to Return to Pre-2020 LevelsBOSTON CONSULTING GROUP 5Ninety-four percent of dealers said that they are gett

29、ing ready to sell and service more EVs.The most frequently cited preparations,however,consist of EV training pro-grams for salespeople and certification programs for the mechanics who will need to maintain batteries and electric drivetrains.While necessary,such measures alone wont be sufficient to p

30、repare dealers for the EV age.Eighty-two percent of franchised dealers also reported that they need more support from automotive OEMs.The biggest need,cited by around one-third of respondents,was for help with EV infrastructure.These responses suggest that dealers are investing in areas that dont re

31、quire much cash and that they may be relying on support from OEMs for more ex-pensive EV needs,such as calibration tools and fast-charging equipment.Despite this inconsistency,US dealers are confident that they will be competitive with pure-play EV companies.Only 3%of dealers surveyed said that they

32、 view companies such as Tesla,Rivian,and Lucid as imminent threats to their businesses.Seventy-two percent stated that these new competitors are not a threat;the remainder were neutral.(See Exhibits 3 through 6.)In addition to their skepticism over EV adoption,dealers cited several reasons for their

33、 lack of concern.Many noted that they will also be selling EVs:traditional OEMs are making the shift from ICEs and are selling EVs through their traditional channels.(In the US,most states require traditional OEMs to sell through their existing dealers,while new EV OEMs,such as Tesla,are able to sel

34、l directly to consumers in many states.)Dealers also observed that pure-play EV companies have limited geographic reach,particularly in rural areas,where many consumers worry about the driving ranges of battery-powered vehicles.0471226202136pp45ppDealer forecastBCG market forecastEstimate

35、 of how many new cars sold in the US will be EVs(%)Sources:Automotive News Research and Data Center;National Automobile Dealers Association;BCG analysis.Note:EV=electric vehicle.Exhibit 3-US Dealers Are Less Bullish on EV Adoption Than Recent Forecasts Are6 ARE US CAR DEALERS READY FOR TOMORROW?Why

36、servicing EVs will likely be less profitable than servicing ICEs353521210Profit per serviceProfit per saleAgreeSomewhat agreeNeutralSomewhat disagreeDisagree“Do you see possible positive effects of EV for each category?”Share of respondents(%)Overall lower average cost of partsfor EVs per

37、 vehicle and yearLess wear and tear maintenance,since EVshave fewer parts,and they are expected to lastlonger before needing to be replacedLess motor and drivetrain servicing,due tofewer mechanical parts20%50%50%4751Greater tire consumption,due to greaterweight and acceleration of EVs20%Source:BCG a

38、nalysis.Notes:EV servicing cost data based on BCG case work.EV=electric vehicle;ICE=a vehicle with an internal combustion engine.Exhibit 4-Half of Dealers Think Selling and Servicing EVs Will be Less Profitable94%Of US dealers say they are taking actions to prepare for EV sales and servicing18Techni

39、cian trainingOthers17NothingInfrastructure15Sales training3217“What support would you like to see more of from OEMs in the EV transition?”Share of respondents(%)Source:BCG analysis.Note:Because of rounding,the percentages do not add up to 100;EV=electric vehicle.Exhibit 5-Dealers Are Preparing for E

40、Vs But Want More OEM SupportBOSTON CONSULTING GROUP 7Embracing Digital RetailDigital commerce has also been silently transforming auto retail.Only around 0.5%of new car sales in the US were transacted fully online in 2020.But if automotive e-commerce follows an adoption curve similar to that of othe

41、r consumer durables,such as appliances and furniture,online sales transactions will likely reach 11%to 17%by 2030 and 21%to 33%by 2035.Although the entire auto purchase process may be slow to move online,digital channels are already playing a critical role.A BCG survey of US consumers found that mor

42、e than 80%of car buyers do research online before visiting a dealership.They turn to traditional offline information sourcessuch as family and friends and specialty magazinesmuch less frequently than they used to.The typical buyer also visits fewer dealerships before making a purchasejust 1.4 on ave

43、rage,compared with nearly 4 just a few years ago.Buyers are more informed and know the vehicle specifications they want before going to a dealership.This is particularly true for EV buyers.Dealers are expanding their digital capabilities in response to this shift in consumer behavior.Ninety-two perc

44、ent reported that they have improved at least one digital offering.Around three-quarters now enable buyers to book online for the home delivery of the vehicles they purchase,for example,and provide better vehicle descriptions and imagery on their websites.(See Exhibits 7 through 9.)OEMs are stepping

45、 in as well,introducing digital services that enable customers to make fewer or shorter visits to dealerships.Genesis,the luxury arm of Hyundai,has launched the Genesis Concierge service,for instance;Ford has launched FordPass App;and Nissan offers NissanHome.Among other things,such services offer h

46、ome delivery of cars for test drives,the ability to buy vehicles from home,online maintenance scheduling,and loyalty programs.Reasons dealers cite for their lack of concern:Traditional OEMs are making the transition to EVs,so we will sell them as well32572Not a threatNeutralThreat“Do you see new EV

47、OEMs such as Tesla,Lucid,andRivian as near-term threats?”Share of respondents(%)Its a matter of location and driving patterns.Most EVs are sold in big metro areas,and penetration in rural areas is lowNew EV OEMs still account for a very small share of sales and productionSources:IHS Markit;BCG analy

48、sis.Exhibit 6-Dealers Arent Worried About Competition from New EV Companies8 ARE US CAR DEALERS READY FOR TOMORROW?767450825Home deliveryBetter vehicle details on websiteAdjusted trade-in policyMoney-back guaranteeNothing“Which digital offerings are you deploying?”Share of respondents(%)92%of US dea

49、lers have improved at least one digital offeringSource:BCG analysis.Exhibit 7-US Dealers Are Investing to Develop Digital CapabilitiesWeak=Digital dealers=Digitally enabled traditional dealersStrongSourcing vehiclesManaging inventoryCustomer acquisitionOmnichannel offeringSelection and valueEnd-to-e

50、nd experienceDistribution networkCapabilitySource:BCG analysis.Exhibit 8-Digitally Enabled Traditional Dealers Are in a Strong Position Versus Digital DealersBOSTON CONSULTING GROUP 9Dealerships also face growing competition from digital dealers,such as Carvana and Vroom,that sell directly to consum

51、ers.But 88%of US dealers said that they dont consider digital retailers a competitive threat,either immi-nently or in the medium term.They may have a point:as digital leaders gain scale,several of them have been beset by falling profit margins,consumer complaints,and admin-istrative snags,such as lo

52、ng delays in processing titles and registrations.They have also struggled to gain access to inventorya challenge that prompted Carvana to acquire the auto auction company ADESA.Financial markets have also turned negative:while the stocks of listed dealership chains,such as Penske and AutoN,have sign

53、ifi-cantly outpaced the S&P 500 Index since late 2020,the shares of listed digital retailers have underperformed.The digital offerings of brick-and-mortar dealers are still far from the end-to-end customer experience offered by online digital retailers.But we are starting to see dealers strength-en

54、their digital reach by forging partnerships with online marketplaces and technology providers.GM has intro-duced CarBravo,an online platform with an expansive inventory of used vehicles both from dealerships and a national central stock.CarGurus Digital Deal enables dealers to sell more vehicles by

55、providing access to online shoppers through its retail platform.The car retail platform Roadster,which was acquired in 2021 by CDK Global,is one of the growing number of companies providing a digital retail experience for brick-and-mortar dealers.By supplementing the traditional strengths of brick-a

56、nd-mortar dealerships,such partnerships help create“en-abled”dealers that should become very competitive with digital dealers.According to our analysis,digitally enabled brick-and-mortar dealerships have an advantage over their purely digital counterparts in terms of customer acquisi-tion,the select

57、ion and value they offer customers,and distribution.Digitally enabled dealers can also provide an omnichannel experience that allows customers to shop at the showroom,online,or both.Despite the many forces of disruption roiling the industry,most US dealers foresee the brick-and-mortar showroom remai

58、ning the cornerstone of light-vehicle retail.Sixty-two percent told us that they doubt the role of physical dealer-ships will drastically change over the long term.Most consumers seem to agree.Eighty-one percent of recent car buyers surveyed said that they still prefer going to a dealer to see,touch

59、,hear,and drive vehicles before buying them.A majority of consumers also indicated an unwillingness to make such expensive purchases online and believe they would be unable to get all the information they need to make a decision.It is easier to go to a dealershipI wanted to see,touch,and drive the c

60、ar before making a choiceI dont do such expensive purchases onlineI think buying a car online is not safe(fraud,scams)Its impossible to get all the needed information online to make a decisionGoing to a dealership is fun and enjoyable81I wanted advice for a dealership sales advisor625856545041Main r

61、easons buyers cite for buying cars through physical dealershipsShare of respondents(%)62%of US dealers think the role of physical dealerships wont change over the long termSources:Dynata;US Census Bureau;BCG analysis.Exhibit 9-Brick-and-Mortar Dealerships Will Remain Vital for Completing Car Purchas

62、esDigitally enabled dealers have an edge over their purely digital counterparts.BOSTON CONSULTING GROUP 11The Implications for Players in Auto RetailThe emerging automotive retail environment has different implications for various players in the ecosystem.We see the following imperatives for success

63、:Dealers.To succeed in the digital age,dealerships need compelling omnichannel offerings that combine online showrooms with their brick-and-mortar counterparts.Dealers should build win-win partnerships with e-commerce marketplaces.They should reduce friction along the customer journeysuch as paperwo

64、rk required for registration,negotiations over financing,and the process for trade-insprior to handing over the keys.Dealerships should also look to monetize their service loaner fleets,such as by introducing subscription business models or short-term rentals.Digital Marketplaces and Solution Provid

65、ers.Rather than view conventional dealerships as competitors,digital players should look for opportunities to strength-en their relationships with them by enabling dealers to leverage their online experience to create customer value.They should also scale up their own solutions for acquiring invento

66、ry,such as with consumer-to-dealer or dealer-to-dealer transaction platforms.Digital players can also provide transaction analytics and other market-intelligence services.OEMs.Automakers should double down on programs designed to prepare dealers for the transition from ICEs to EVs.They should rethin

67、k their approaches to dealer profit margins and bonus programs,especially as the build-to-order trend grows and maintenance and ser-vicing revenue change.OEMs should collaborate with dealers to help create seamless customer journeys that combine online with offline engagement and consider new ways t

68、o manage and monetize inventories of off-lease vehicles.The COVID-19 pandemic altered the way people work and buy daily necessities.In much the same way,stock shortag-es,the rise of digital dealers,and the transition to EVs are transforming how cars are bought and sold.The winners in the auto retail

69、 landscape of the future will be the dealers,online marketplaces,and OEMs that best combine the traditional advantages of the showroom with innovative digital solutions to create a seamless customer experience.12 ARE US CAR DEALERS READY FOR TOMORROW?About the AuthorsKaren Lellouche Tordjman is a ma

70、naging director and senior partner in the Mexico City office of Boston Consulting group.You may reach her by email at .Augustin K.Wegscheider is a managing director and partner in the firms Chicago office.You may reach him by email at .Mathieu Nemoz-Guillot is a principal in BCGs Chicago office.You

71、may reach him by email at .Eric Jesse is a principal in the firms Denver office.You may reach him by email at .For Further ContactIf you would like to discuss this report,please contact the authors.Boston Consulting Group partners with leaders in business and society to tackle their most important c

72、hallenges and capture their greatest opportunities.BCG was the pioneer in business strategy when it was founded in 1963.Today,we work closely with clients to embrace a transformational approach aimed at benefiting all stakeholdersempowering organizations to grow,build sustainable competitive advanta

73、ge,and drive positive societal impact.Our diverse,global teams bring deep industry and functional expertise and a range of perspectives that question the status quo and spark change.BCG delivers solutions through leading-edge management consulting,technology and de-sign,and corporate and digital ven

74、tures.We work in a uniquely collaborative model across the firm and throughout all levels of the client organization,fueled by the goal of helping our clients thrive and enabling them to make the world a better place.Boston Consulting Group 2022.All rights reserved.11/22For information or permission to reprint,please contact BCG at .To find the latest BCG content and register to receive e-alerts on this topic or others,please visit .Follow Boston Consulting Group on Facebook and Twitter.