CNN warned readers last week not to expect the car shortage we’re experiencing here in America to be going away anytime soon, due to global semiconductor shortages and supply chain disruptions.
This follows a cascade of announcements from automakers that their production lines are stalling out, which has continued throughout the summer months. These shortages have only added fuel to the fire of car demand: The New York Times reported last month that even used car prices are up about 45 percent over the past year.
Where is all this demand for cars coming from? A number of economic factors are surely at play, but changing buyer demographics and preferences may be a big part of it. The New York Times also reported recently that Millennials are outpacing the Baby Boomer generation for the first time in the purchase of new cars, accounting for about 32 percent of total new-car sales.
These buyers, according to the article, vastly prefer skipping car dealerships altogether and purchasing direct online. The article goes on to cite that "millennials were nearly twice as likely as boomers to shop for and buy a vehicle — new or used — entirely online, according to Cars.com." Taking note of this trend, even OEMs including Ford appear to finally be stepping away from the dealership model with its turn towards built-to-order F-150s and preorders for the Lighting.
Could this year be the year that we finally see momentum for ditching the dealership?
Beyond the trend of consumers preferring online sales to the old dog-and-pony show on car lots, just imagine the positive environmental impacts of reclaiming the land currently occupied by them (bye-bye, leaking underground petroleum storage tanks). While I envisage and some pontificate about dealerships’ demise, automakers are afforded the luxury of being able to slowly pivot their model. Meanwhile, the brunt of the burden of being an early adopter of an innovative new model has fallen on the shoulders of automakers of exclusively electric vehicles. A model which, of course, was pioneered by a certain electric vehicle maker.
It’s no secret that dealerships themselves are geared towards the sale of internal combustion engine (ICE) vehicles.
As ACTNews touched on in its piece "Direct-to-Consumer Sale of EVs is a No Brainer," dealership employees are extremely under-equipped with knowledge about available current financial incentives, charging infrastructure and other information specific to EV ownership. However, the biggest obstacle to widespread EV direct-to-consumer sales is arguably state laws such as ones in Kansas, which not only outright ban these transactions, but actually make it more expensive to register an EV than an ICE vehicle (see full list of the offenders here).
Tesla is in so many disputes with dealerships that there is actually a Wikipedia page dedicated solely to their documentation. Encouragingly, in the past year, Rivian, Lucid and Lordstown united with Tesla in an attempt to take on bans such as the ones in these states, aiming to finally make purchasing EVs more accessible to more Americans.