The dealer is no longer built to serve people's needs and wants (some may argue it never has). PS’s 2022 Automotive Consumer Report found that most U.S. car buyers (85%) have been looking for less than six months. So, while the car is one of the biggest purchases in a consumer's life (along with a house), people already understand what they want before they set foot in the dealership. In Asia-Pacific (APAC) and many regions in Europe, consumers are purchasing directly from the manufacturer—especially in the United Arab Emirates (UAE), China, and India—where platforms are set up and enable a drastically different consumer experience.
Future path-to-purchase models will resemble the likes of what's already started over in parts of Europe and APAC regions. Specifically, dealerships generally hold low to no inventory in stock, and cars are instead made-to-order, configured to the consumer's wants, and the consumer receives the vehicle a few months later.
Several factors drive significant change like this—one being driven by consumer behavior (like the differences in how Gen Z shop and buy over Baby Boomers), and the other being driven by brute force. The pandemic and the chip shortage have caused dealers to have empty lots instead of their usual overflow. Consumers are responding to the current state by pre-ordering their cars.
In a recent article by Forbes, Ford CEO Jim Farley stated, "A third of our sales are order-to-delivery now. It used to be less than 5%." As this shift begins to take shape, it shows no signs of reversing.
In a new path-to-purchase model, dealerships can serve as delivery mechanisms for vehicles or take on post-purchase sales and services, such as vehicle upfitting and maintenance. OEMs must evolve their organizations to deliver these experiences seamlessly across tiers and channels. This is where an OEM becoming a tech company whose platforms are sophisticated and primed for scale is incredibly important.