Pub. 4 Issue 3

The point here is not to mock forecasters from the past (hind- sight is after all 20/20), but to remind us all that the future of this industry has never been very easy to see. So take what you read here as input rather than as output, and arrive at your own forecast. The author’s personal bias is to predict slower rates of change than do most experts. If there is one lesson I have learned from hearing and reading numerous automotive forecasts over the years, it is that: while change is constant in this industry, it generally does not proceed as quickly as many observers and analysts expect (or hope). Dealers set up websites, hybrids make inroads, and aluminum displaces iron in cars – but almost always more slowly than predicted. There is in our industry such an enormous legacy of history, processes, and institutions—the sum total of over a century of formation and dis- solution of OEMs, suppliers, dealers, garages, rules, regulations, inventions, habits, traditions, and more—that rapid change faces massive frictional drag. So you will see in this report, in many cases, agreement with other forecasts of change – but at a slower pace than they project. Methodology Our approach has been to synthesize the opinions and views of numerous automotive industry experts, not to thrust on the reader the particular perspectives of the author. This is because our sub- ject is so complex that I could not ever hope to have an integrated, deep, and broad view of all the moving parts, from F&I profits to autonomous vehicles’ evolution, from new-car margin trends to the potential for electric cars, from insights about dealer human resources to commentary on regulatory developments, and much more. So the forecasts here are in most cases my best estimate of what I think the consensus of informed opinion would come up with. In a few places, where our interviewees and written sources showed no clear consensus, I have inserted my own forecast. But again, readers are encouraged to take into account what is writ- ten here, and then come up with their own projections: we hope this report is valuable input to your planning process, but it cannot replace that process. In terms of the expertise we sought, we cast the net very wide. We talked to dealers both public and private, in both major mar- kets and small rural communities; we interviewed investors who had purchased dealerships and those who had decided not to; we talked to IT companies and consultants; we spoke with people outside our industrywhomight have insight for us (e.g. other types of retailers); we spoke to truck dealers, attorneys, vendors to the industry, OEMs, state dealer association executives, and more. We visited in person high-tech dealers in Silicon Valley and small stores in traditional rural locations. And we read reports, written by academics, regulators, industry associations, consultants, jour- nalists, think tanks, andmore – roughly 150 in depth, and another 100 or so skimmed. There is no lack of opinion on the topics we tackled, though wisdom was harder to find. Our hardest task was not the collection of views and data, but the sifting, sorting, and organizing of it all, until we coaxed it into some sort of coherent story which would yield useful insights. As a result of our very broad sweep of topics, this is a very long and complicated report. The Executive Summary boils it all down, as do the visual presentation versions of the work. But read- ers should be warned: in many areas (e.g. autonomous vehicles) the combination of multiple issues, colliding with strongly-held opinions, based on very scanty data resulted in a complex story. There are few easy answers or “soundbites” in this document.  DEALERSHIP OF TOMORROW — continued on page 28