For dealerships, offering car subscription services can represent a significant revenue opportunity, as well as a way to expand their customer base and differentiate themselves from competitors.
By leveraging their existing customer-facing advantages, such as showrooms and service facilities, dealerships can create a more comprehensive and seamless subscription experience for customers, while also generating new revenue streams.
In this context, car subscription services represent a significant opportunity for dealerships to stay ahead of the curve and capture new business in a rapidly evolving industry.
Key Advantages for Dealerships
Dealerships have existing customer-facing advantages such as showrooms and service facilities, which can be leveraged to provide a more convenient and seamless subscription experience for customers. Dealerships also have established relationships with customers and can leverage their existing customer base to promote their subscription service offering.
The fact that dealerships typically operate multiple franchises can provide an advantage when it comes to offering car subscription services, particularly in terms of brand and vehicle diversity.
Offering a diverse range of vehicle options is important for subscription services, as it allows customers to choose the vehicle that best suits their needs and preferences. Dealerships that operate multiple franchises can offer a wider range of vehicle options, providing customers with greater choice and flexibility.
Additionally, offering multiple brands can help dealerships to appeal to a broader customer base, particularly if they are able to offer brands that are not typically associated with their dealership. This can help to expand their customer base and reach new market segments.
Vehicle Procurement Channels
Dealerships that have established relationships with automakers can use their existing supply chain to acquire vehicles for their subscription service, allowing them to quickly build their fleet and respond to changes in demand. Additionally, automaker discounts and guaranteed buyback programs can also be significant advantages for dealerships that want to offer car subscription services.
Automakers may be more willing to offer discounts or other incentives to dealerships that purchase vehicles in bulk for their subscription fleet. These discounts can help to reduce the cost of procuring vehicles, making it more affordable for dealerships to build their subscription fleet and offer competitive pricing to customers.
Guaranteed buyback programs are another advantage of working with automakers. These programs allow dealerships to purchase vehicles at a discounted rate and then sell them back to the automaker at a guaranteed price after a certain period of time. This can help to reduce the risk of holding onto vehicles that may be difficult to sell or depreciate quickly, providing a more stable and predictable revenue stream for the dealership.
Moreover, automaker discounts and guaranteed buyback programs can help dealerships to manage their inventory and reduce their overall financial risk. By purchasing vehicles at a discounted rate and then selling them back to the automaker at a guaranteed price, dealerships can more effectively manage their cash flow and reduce the risk of holding onto vehicles that may be difficult to sell or depreciate quickly.
Moreover, working with automakers can provide dealerships with access to the latest vehicle models and technologies, which can help to attract customers and differentiate their subscription service from competitors. Automakers may also provide training and support to help dealerships effectively manage their subscription fleet and ensure the vehicles are maintained to the appropriate standards.
Challenges for Dealerships
Some dealerships may be reluctant to offer subscription services if they see it as a threat to their traditional sales model. However, there is evidence to suggest that operating car subscription alongside traditional sales within a dealership can be more advantageous.
Offering both traditional sales and car subscription services can provide dealerships with a more diversified revenue stream, which can help to offset fluctuations in demand and economic conditions. By offering both options, dealerships can capture a broader range of customers, from those who prefer traditional car ownership to those who prefer a more flexible subscription model.
Moreover, car subscription services can help to increase customer loyalty and retention. By offering a subscription service, dealerships can build long-term relationships with customers, who are more likely to continue using the dealership for their automotive needs, such as maintenance and repairs. This can help to drive additional revenue and create a more stable customer base.
Additionally, offering car subscription services can help dealerships to differentiate themselves from competitors and stay ahead of the curve in a rapidly evolving industry. As more customers look for flexible and convenient alternatives to traditional car ownership, dealerships that offer subscription services may be better positioned to capture new business and stay relevant.
New Partnership Opportunities with Automakers
To address these challenges, a renewed partnership between automakers and dealer networks may be beneficial. Automakers can provide the necessary resources and expertise to manage a subscription service, while dealerships can provide the customer-facing advantages and existing customer relationships. By working together, automakers and dealerships can create a more comprehensive and seamless subscription experience for customers, while also generating new revenue streams for both parties.
However, tensions have risen in recent years due to the shift towards the agency model, which aims to reduce the influence of dealerships in the car sales process. This may make it more difficult to establish a renewed partnership between automakers and dealer networks for subscription services. Nevertheless, with the right incentives and collaboration, it is possible to create a mutually beneficial relationship that benefits both automakers and dealerships, while also providing a more convenient and attractive subscription offering for customers.
It's important to note that relying on automakers for vehicle supply can also come with risks, particularly if there are supply chain disruptions or changes in production that impact the availability of certain models. To mitigate these risks, dealerships may need to have contingency plans in place and consider diversifying their supply chain to include other sources of vehicle procurement.