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A car dealership or vehicle local distribution is a business that sells new or used cars at the retail level, based on a dealership contract with an automaker or its sales subsidiary. It employs automobile salespeople to sell their automotive vehicles. It may also provide maintenance services for cars, and employ automotive technicians to stock and sell spare automobile parts and process warranty claims. In 2013, the U.S. new car dealers market was close to $715 billion and the used car dealers industry almost $89 billion. The strongest results in 2013 were achieved in new vehicle sales, followed by used car sales and service and parts.
The early cars were sold by automakers to customers directly, or through a variety of channels that included mail order, department stores, and traveling representatives. The first dealership in the United States was established in 1898 by William E. Metzger. Direct sales by an automaker to consumers are now limited by most states in the U.S. through franchise laws that require new cars be sold only by licensed, independently owned dealerships.
Most automotive manufacturers have shifted the focus of their franchised retailers to branding and technology. New or refurbished facilities are required to have a standard look for its dealerships and have ‘product geniuses’ to liaise with customers.
Imagine this: you are driving your new Audi R8 along the Californian coastline at sunset, through the panoramic roof you admire the passing clouds – you lean deeper back into the red leather contoured sport seat, the black dashboard matching the shiny black coated hood reflecting the last rays of sunlight. You feel a prickle of excitement as you steer effortlessly through bends along the coast. It feels good. You smoothly stop the car, and subsequently exit. All of a sudden you snap back – you are in Canary Wharf in London, the financial capital of Europe. It’s lunchtime, in 20 minutes you need to be back at your desk for a conference call with Wall Street to start off the afternoon. You take one last look at the dream machine you were test driving on a simulator in your local dealership; all while the customer relationship manager smiles and tells you, “Rupert, I’ll send you the QR code, so you can review the specs of your model at leisure. I know you are still undecided about the interior colour and trim. Just play around with the configurator. By the way, I have booked a real test drive for you on Saturday which will be held at your home. My sales guy will drop off the car.” Rupert is pleased by the options offered, and crosses his fingers that his bonus comes in – and that the spin around the Cotswolds over the weekend will do the trick with Martina, his wife.
The car industry is finally waking up to the realisation that what happened to brick and mortar stores in the publishing and electronics industries is now on their door steps. In 2009, only 4 percent of all retail sales (across all product lines, except fuel stations) globally were online. A trend which accelerated to about 11 percent of all sales in 2011 and is expected to be around 13 – 15 percent when 2013 data is finalized. In certain industries, like publishing & entertainment, the leading retailers already collect over 50 percent of their revenues online, which has forcibly shutdown major brick and mortar stores (like Borders in the US) who have failed to follow the trend.