Dealership extinction report “shortsighted”: CADA

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Car dealerships are set to become extinct within less than a decade, according to a new report published by RethinkX, an independent think tank based in San Francisco, Calif. But the Canadian Automobile Dealers Association regards the study as not being “thoroughly thought out.”

“The report researchers did not look at all the angles,” said John White, CADA’s President and CEO. “I don’t foresee the doom and gloom that these think tanks or experts predict,” said White. “We’ve been dealing with many predictions over the past 15 years or so with the advent of the Internet, as it pertains to the demise of the car dealer in the traditional business model.”

The report, prepared by James Arbib, a technology investor, and Tony Seba, a Stanford University economist, concludes that technological advances and the car-sharing economy will cause dealerships to gradually disappear over the next seven years.

The growing demand for electric vehicles and the rise in popularity of ride-sharing services are two major factors the study cites for the eventual demise of the car dealership as we know it.

Currently, the price of EVs is high and out-of-reach for most consumers, but the authors predict in the long run, EVs will be far less expensive to operate than gas-powered vehicles.

“If you look south of the border at the Warren Buffetts and George Soros’s of the world, they’re buying and investing big-time with stocks of automotive groups,” noted White. “When the Buffetts of the world are making big plays that’s a good sign.”

“The assumption that the technology is going to drive consumer behaviour is naive…It may work for an iPhone, but we’re talking about transportation, safety, independence – we’re talking about basic things that we as humans cherish,” said Chuck Seguin, President of Seguin Advisory Services. Range anxiety and the temperamental nature of batteries are other obstacles to the adoption of EVs, said Seguin.

Look out for the June/July issue of Canadian auto dealer for more on this story.

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