Industry Articles

In the middle of historic changes, are subscriptions and car sharing the path for mass EV adoption?

While the new-car “agency” model is getting all of the attention, there are other disturbing trends afoot in some global OEMs’ efforts to “remake” distribution that so far in the U.S. have gone unnoticed. One is the control and retailing of used vehicles.

Between the OEM agency model, EV incentives in the federal Inflation Reduction Act and California phasing out internal-combustion-powered vehicles, it’s hard not to read the handwriting on the wall.

Dealers charging high prices above MSRP across the board are creating national news and public backlash, and it’s not just the OEMs that are watching.

Between Tesla, Rivan, Lucid and Fisker operating without dealerships and the agency model introduced by traditional manufacturers, marking up above MSRP during these demand-driven times may come back to haunt dealers.

The question remains: how to get to the “early majority” phase of adoption, beyond those affluent enough to already have a few cars in the driveway. Persuading a lower income, single vehicle household to opt for a more expensive EV in a “charging desert” neighborhood seems way off.

It seemed like every third booth or so, among 200 transportation companies, was selling some new, innovative and convenient system for home, work or public charging. CES 2022 made it clear electrified vehicles are the future.

Vehicle Ownership Enablement Programs Provide Freedom and Mobility to Those Who Need It Most and Provide a Much Larger New Employee Pool for Entry-Level Jobs.

Over-the-air updates could enable technicians to identify and diagnose a problem remotely and have the parts ready for a vehicle service appointment, boosting a dealer’s efficiency and net income, says Bill Cariss, president and CEO of Holman Strategic Ventures.

Under the agency model, the franchise dealer no longer is the focal point of a new vehicle sale; instead, the customer places an order directly with the OEM and names a preferred dealer. The price and dealership mark-up or commission is set by the OEM.

Car dealers have always used “runners,” but perhaps the accelerated growth in digital retailing and “door to door” vehicle service requires a more scalable program and process.

The introduction of new-vehicle subscriptions faded out as a nonstarter on the fringe. Will electric vehicles provide the volume use case?

When an esteemed Wharton finance professor and the country’s largest private vehicle wholesaler independently warn of the same future, its probably worth taking notice

What do Uber eXchange Leasing, Fair.com and Maven all have in common? They thought they could make money renting to “gig” rideshare or delivery drivers, and they are all out of that business, or out of business.

For gig platforms that self-insure for collision and liability, whatever is paid out in an accident beyond whatever deductible is stated is coming out of the platform owner’s pocket, not an insurance provider.

Volvo says it will be an all-electric vehicle company in 2030 and by that time will convert entirely to online sales, essentially relegating dealers to delivery and service centers. Such an announcement puts car dealers on notice as to where OEMs want the “puck to go.”

The pandemic has accelerated many changes. Some customer-centric services, such as a vehicle “concierge” or pick-up and delivery, went from a convenience to the price of admission for most fixed operations.

For those dealers not in the premium luxury end of the market, wouldn’t it make sense to investigate the marketing, technologies and new ways of securing business in the subprime, deep subprime and first-time buyer side of the business? art 1 – The new stars of Wall Street in automotive retail – Carvana, Vroom and soon Shift – are gaining both value and market share, despite staggering losses. So what defendable market advantage do they have over traditional car dealers?

Home delivery for many items such as prepared food and groceries are costing everyone more money, and everyone is losing: the merchant, the delivery company, the driver, and most importantly, the consumer.

Facilitating a program that provides a process for private ownership to lower-income households that do not have vehicles would speak to the “Poverty of the Carless” immediately.

The new stars of Wall Sreet in automotive retail, Carvana, Vroom and Shift, are gaining value and market share despite historic losses and only recent breakeven results. So what defendable market advantage do they have over traditional car dealers? Nothing more or less, than a new way of thinking about the customer.

PodCast – John Possumato, Founder and CEO of DriveItAway, spoke to Automotive Fleet to discuss how vehicle subscriptions can be catered to the fleet market. He notes that these types of services have long been marketed toward the retail side, but that the fleet market could prove to be a better place for these services.