rethinking automotive industryHaving explored the future of the car dealers, we now need to turn to the future of the automotive manufacturer. What will they look like? How will they function?

If what I have proposed about the automotive industry actually happens, where dealers become more of a distribution center, this will change much of the manufacturing processes. Automotive manufacturers will need to become more just-in-time oriented.

If a user goes online, builds a vehicle like they want, gets financing for their purchase and submits the information, manufacturers will have to develop a process to get than information, build out the vehicle, and begin to move it through the assembly line. Then they will have to ensure it’s on the right train (or boat or truck) to the right dealer where the customer can pick up the vehicle and drive off the lot.

They will have to develop time of delivery projections. They will have to develop pricing and cost matrices. And in some cases, manufacturers will have to develop the technology to create a just-in-time system.

Some manufacturers can customize a vehicle for a customer and know that it will be built and delivered. Some manufacturers do not allow that. Those that do not will have to develop just-in-time processes to accommodate this, and that investment could be costly.

The Future of the auto dealershipIf the automotive power shift I described in the previous post does occur, how does that change the nature of the auto dealer in the near future? Here’s how I see this playing out.

There will be two avenues to the purchase of a new vehicle. One is an online process that allows the consumer to either select a vehicle in the dealer’s inventory or the dealer’s network which is viewable online, or to custom build a car themselves, with their own set of colors, options, and features. The second process is offline, where a customer walks into a dealership and chooses from something in-stock or available through the dealer’s network.

I see this happen every day. A customer, either online or in the showroom, wants something different, odd, or just something we don’t have on the lot. It has to be located, or in some rare cases, special ordered. In fact, a lot of our new car sales require us to locate a vehicle from another dealer. And, the customer may go through 3-5 different configurations based on price and availability. The customer wants what they want assuming they can afford it.

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Car salesmen no longer have the power of information. Shoppers now have access to the same information, and that shifts the power from the dealer to the consumer. The dealer is now competing against other manufacturers, other dealers with the same vehicle, and the leverage held by the shopper.

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