Since the first dealership opened in 1889, franchise dealers have relied on purchasing from OEMs, applying their desired margins to the wholesale price to make a profit. Recently, with Tesla’s direct-to-consumer sales model, we’ve witnessed a significant shift in the automotive industry. Brands like Mercedes-Benz, Kia, and Honda have moved towards a B2C distribution model, while Volvo has introduced new brands like Polestar to capitalize on this opportunity.
While this creates price consistency and transparency globally, it raises questions about the long-term sustainability of traditional dealerships. History has shown that those who adapt and evolve survive, while those who remain stagnant fade away. We are currently seeing a mass consolidation in the dealership industry, indicating that smaller operators recognize the need for volume and diversification to survive the next cycle.
The Future of Franchise Dealerships
By the end of 2025, over $24 billion in new annual auto financing will shift to the subscription segment. This indicates that fewer people will purchase new vehicles. Dealerships will become establishments for test drives, customization, and collection, significantly reducing front-end revenues. Additionally, as the mix of alternative energy vehicles grows, service revenues are forecasted to halve by 2035 due to fewer consumable and serviceable parts in electric vehicles.
Understanding the Current Challenges
Franchise dealerships face several ongoing challenges in their daily operations:
Damage Claims: False or overlooked damage claims can lead to significant costs and disputes.
Time-Consuming Inspections: Manual inspections for vehicle damage are labor-intensive and prone to human error.
Customer Satisfaction: Ensuring a seamless and efficient customer experience is crucial yet often difficult to achieve consistently.
Revenue Generation: Identifying additional revenue streams without increasing operational burdens is a constant struggle.
CMT Scanner technology addresses these challenges by leveraging AI and automation. Here’s how it works:
- Automated Damage Detection: As vehicles approach the scanner, our system reads the license plate and performs a thorough inspection, identifying any existing damage in seconds.
- Accurate Estimates: The AI-driven system provides precise repair estimates, allowing dealerships to offer transparent and reliable quotes to customers.
- Enhanced Customer Experience: By streamlining the check-in and inspection process, customers enjoy a quicker and more seamless service experience.
- New Revenue Streams: Our technology identifies potential same-day ‘value adds’ such as Paintless Dent Repair (PDR), wheel repair, and tire alignment services, promoting them to customers by their promised pick-up time.