Car dealership

Typical car dealership (in this case a Jeep dealer) selling used cars outside, new cars in the showroom, as well as a vehicle entrance to the parts and service area in the back of the building.
Service and repair entrance
Auto dealer's service and repair facility

A car dealership or vehicle local distribution is a business that sells new or used cars at the retail level, based on a dealership contract with an automaker or its sales subsidiary. It employs automobile salespeople to sell their automotive vehicles. It may also provide maintenance services for cars, and employ automotive technicians to stock and sell spare automobile parts and process warranty claims.

History of car dealerships

The early cars were sold by automakers to customers directly, or through a variety of channels that included mail order, department stores, and traveling representatives. The first dealership in the United States was established in 1898 by William E. Metzger. Direct sales by an automaker to consumers are now limited by most states in the U.S. through franchise laws that require new cars be sold only by licensed, independently owned dealerships.[1]

Car dealerships are typically franchised to sell and service vehicles by specific companies. They are often located on properties offering enough room to have buildings housing a showroom, mechanical service, and body repair facilities, as well as to provide storage for used and new vehicles. Many dealerships are located out of town or on the edge of town centers. An example of a traditional single proprietorship car dealership is Collier Motors in North Carolina. Many modern dealerships are part of corporate-owned chains such as AutoNation with over 300 franchises. Dealership profits in the US mainly come from servicing, some from used cars, and little from new cars. The average new car price was $33,419 in 2015, while used cars cost $19,397.[2]

Most automotive manufacturers have shifted the focus of their franchised retailers to branding and technology. New or refurbished facilities are required to have a standard look for its dealerships and have ‘product geniuses’ to liaise with customers.[3][4] Audi has experimented with a hi-tech showroom that allows customers to configure and experience cars on 1:1 scale digital screens.[5][6] In markets where it is permitted, Mercedes-Benz opened city centre brand stores.[7]

Tesla Motors has rejected the dealership sales model based on the idea that dealerships do not properly explain the advantages their cars, and they cannot rely on third party dealerships to handle their sales. However, in the United States, direct manufacturer auto sales are prohibited in almost every state by franchise laws requiring that new cars be sold only by dealers.[8] In response, Tesla has opened city centre galleries where prospective customers can view cars that can only be ordered online.[9][10]

Multibrand car dealers

Multibrand and multimaker car dealers sell cars from different and independent carmakers.[11][12] Some are specialized in electric vehicles.[13]

Auto transport

Auto transport is used to move vehicles from the factory to the dealerships. This includes international and domestic shipping. It was largely a commercial activity conducted by manufacturers, dealers, and brokers. Internet use has encouraged this niche service to expand and reach the general consumer marketplace.

See also

Organizations

References

  1. ↑ Quinland, Roger M. "Has the Traditional Automobile Franchise System Run Out of Gas?". The Franchise Lawyer. Retrieved 21 April 2016.
  2. ↑ NADA Data 2015 page 6-7. National Automobile Dealers Association, 2015. Archive
  3. ↑ New BMW stores to be big, open, beige
  4. ↑ Geniuses smart move for dealers, BMW says
  5. ↑ http://www.ft.com/cms/s/0/d13c6b1e-6e51-11e3-ac2a-00144feabdc0.html#axzz2xu0PgTZi
  6. ↑ The Future of Car Retailing - Forbes
  7. ↑ Archived 8 January 2014 at the Wayback Machine.
  8. ↑ Bodisch, Gerald R. (May 2009). "Economic Effects of State Bans on Direct Manufacturer Sales to Car Buyers". United States Department of Justice. Retrieved 21 August 2016.
  9. ↑ Tesla sets up shop in Dallas - minus test-drives and sales
  10. ↑ Tesla: we're not car dealerships | Marketplace.org
  11. ↑ Das Automobile-A Multibrand Car Showroom
  12. ↑ http://ec.europa.eu/competition/publications/cpn/2006_2_33.pdf
  13. ↑ First EVEN EV store opens
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