Execs think buyers' shift to online retailers will see dealerships close.
As many as half of car dealerships are expected to disappear by 2025, according to a survey of the UK’s automotive industry executives.
The survey by professional services firm KPMG found that 75 percent of key industry players think that 20-50 percent of brick-and-mortar car retailers will no longer exist by the mid-2020s as buyers shift their focus to online retailers.
Justin Benson, UK head of automotive at KPMG, said: ‘The majority of UK automotive executives are convinced that the only means for dealers to survive is by restructuring into a service factory or a used car hub in the future. This is certainly a warning sign for physical retailers and presents a need to rethink retail concepts and business models, particularly with customers purchasing more of their goods and services at the touch of a button.’
And the future of dealerships isn’t the only thing on execs’ minds, either, as the survey revealed that 61 percent of the country’s senior bosses think issues surrounding vehicle financing will be a problem in the coming years.
According to Benson, the industry fears that falling residual values – the amount the car is worth after a set period of time – will cause problems for creditors.
‘We live in the age of credit, which is often convenient for those who want to make big purchases and spread the cost out over a period of time,’ he said. ‘However, existing credit arrangements for vehicles taken out over the past couple of years could cause additional risks for credit companies. This is particularly true if residual values fall further in the short term and people are handing their keys back when the residual value of the vehicle is lower than the PCP contract value.’