The ‘economics of the box’: prospects for the dealer business model

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Tesla plans direct distribution

Tesla ‘Gallery’ New Jersey, USA

Two billionaire investors are betting against each other over the future of the car dealership system in the US: Elon Musk of Tesla and Warren Buffett of Berkshire Hathaway. Musk is gambling that he can get around individual state dealer franchise laws and sell cars direct. He has only been successful in a few states so far but believes that the era when US buyers are forced to use a car dealer is almost over. Pitted against him is Buffett who has bought the 5th largest US dealer group because he believes the US dealer franchise system will remain more or less intact and disruptors will not be able to break through. But, on one point, Musk and Buffett share the same opinion: if you can get the scale right and finance the stock, owning dealerships can be a very high return business for shareholders anywhere in the world. Why? Because dealer groups  can arrange to have very little equity in the business. The Net Profit may be as low as 1% but average Return on Equity still exceeds 15% in the US, according to NADA. However, for car makers the dealer model in Europe and the US  is much less attractive. According to PwC, car distribution costs are typically around 15% of  a car’s total costs – see chart below – although other analysts suggest it may be higher, between 18-22%.  So car manufacturers and dealers interests may not be perfectly aligned on the future of the existing dealer network model and that may be the nexus for future change.

Distribution Costs as % of Total Manufacturing Costs

For Musk and Buffett the future of car dealers will have little impact on their fortunes either way but, for dealers of all sizes across the globe, the outcome will be make or break. During its 100 year history the retail motor industry has already experienced two eras. Now it may be on the cusp of a third. This post looks at the legacies from the past and sets out the possible scenarios for independent dealers and groups as they face the future.

Golden Era: Growth and Independence 1900 – 1960

US Car Dealers

US Auto Dealerships 1917 – 2017

The original dealer model evolved in the US at the turn of the early 1900’s, primarily to meet the needs of auto makers, and was quickly exported to Europe and the rest of the world. Franchising dealerships provided OEM’s with an attractive method for smoothing  demand for their stock  by passing on the costs of excess inventory and achieving stable distribution and after sales customer service levels, while retaining some control of retail prices and the representation of their brand. It was financially attractive to both parties. The OEM eliminated the costs and risks of vehicle and parts stock and could obtain dedicated brand representation in a specific town, city or region at no investment from themselves. In return, the dealer investor obtained the exclusive right to sell new cars and the best opportunity for servicing and repairing them. The dealer had access to the exclusive parts and technical know-how which was unavailable to those outside the franchise system. Independent business people were the partners of choice for OEM’s. At start up they were usually 100% invested in the initial business which guaranteed their commitment and enthusiasm.

In the US Dealers numbers peaked at 53,125 in 1927 and fell steadily to 33,658 in 1960 as manufacturers brought wholesaling in house away from 3rd party agents and raised the dealer financial investment levels required to represent their brands. By 1980, in the US, there were only 23,379 dealers. In Europe the trend was similar but followed  a later timeline. It’s estimated that there were around 220,000 dealers in Western Europe by 1939, although numbers dropped until the post war period.  Despite many closures during World War II there were still around 180,000 in 1955,  buoyed by a post-war boom in GDP , which led to massive government investment in roads and car infrastructure, and an expanding new car market – rising by 2.0%+ a year in the post-war period. Demand was fueled by the rise of car advertising on television, a wider range of domestic and imported models and general agreement that the motor car was to be a central part of modern life.

Global vehicle sales growth 3.4%

Perhaps the most important legacy of this period was the establishment of Franchisee protection laws in the USA which, in turn, set precedents for laws in the EU, Japan and more recently, China.  Franchisee protection laws were supported due to the way individual US states are funded. Each state earns about 20% of total state tax revenues from car sales and, additionally, dealerships and their support operations typically provide 7-8% of total state employment. Almost 90% of these tax receipts are provided by new car dealerships. As a result, dealerships and state dealer associations – often generous political donors – have been able to exert pressure on local legislators to enact laws that protect their existence and profitability from arbitrary action by OEM’s. In the 1920’s both Ford and GM pressurised their dealers to finance excessive stock levels and pushed many dealers into bankruptcy. Following considerable political lobbying, in 1956 the US Federal Government enacted a law, widely known as ADDICA – Automobile Dealers Day In Court Act –  which gave dealers the right of redress if their franchisor did not act in good faith. By the time it passed into law, 20 states had already passed Auto Dealer franchise protection laws. Nowadays, every state, except Maryland, regulates three aspects of auto dealer franchising: they prohibit manufacturers from terminating franchises with existing dealers unless they prove they have  “good cause” to do so, require auto manufacturers to sell new cars through franchised dealers, and protect dealers from competition by awarding exclusive territories.

While the automotive dealer franchise system in the US is enshrined in law, the system is highly regulated across the globe. But, although car dealers are ubiquitous, the legal regulations that govern franchise distribution and the sale and service of vehicles are regional – the rules are all slightly different. That makes it difficult for OEMs to employ a ‘global’ distribution approach for vehicles. Dealers are often well-served by the current system. They get exclusive brand representation in an area and a privileged position from which to provide aftermarket services in return for financing new vehicle and parts stock and meeting the OEM’s qualitative standards.

Silver Era: Consolidation and Over-Supply 1970 – 2015

Still scope to reduce dealer numbers in major EU markets outside the UK?

From the 1960’s onward dealer numbers began to fall. More accurately, as many manufacturers  employed a two-tier structure of main and sub-dealers, sub-dealer contracts were ended when they came due for renewal. In addition, as sales volumes grew in export markets, agency contracts were replaced by in house dealer network management. The agency network was then selectively re-appointed. In the US the number of dealers declined from its peak of 42,000 in 1939 to its current level of 16,700 in 2017, according to NADA,  a fall of 1.2% pa for almost 80 years. A similar process took hold in Europe. By 1991 there were around 120,000 dealers in Western Europe of which 75,700 were main dealers.  By 2012 there were 70,000 dealers of which 48,000 were main dealers – a fall of 2%+pa in main dealer numbers for over 20 years. Arguably, in the key EU markets except the UK there is considerable scope to reduce dealer numbers still further – see chart.

In 2016 there were 69MN cars sold worldwide of which 70% were sold in four key regions: Europe including Russia (25%), North and South America combined (17%); China (18%) and Japan (8%). McKinsey estimated there were around 170,000 franchised dealers across the globe in 2014 but the size of dealer networks is still falling and, due to consolidation, the number of dealer groups is rising. The result is far fewer independent single site operators in most markets and a higher proportion of well-financed dealer groups who find that arguing for continued franchisee protection increasingly unconvincing.

However, the legacy of the first era – franchisee protection – still makes wholesale dealer changes a risky proposition. In the USA, where dealers are an entrenched element of the distribution system, new entrants, such as Tesla, are fighting to set up direct distribution, supported by many consumers and the Federal Trade Commission, so the stage is set for significant legal and political conflict in the coming years.Tesla is unlikely to be alone in seeking direct distribution. In the light of changes in connectivity, consumer expectations and vehicle technology, many OEM’s may also support direct distribution.

In China the government is backing dealers, against over-powerful OEM’s, and the consumer, against both dealers and OEM’s. But the Chinese regulators are not enshrining the dealer role in law. Instead, they appear to have two strategic, primary objectives: the first is to reduce the outflow of capital, particularly to EU premium car makers and Tier 1 component manufacturers, by investigating their cartels and imposing heavy fines to get prices down to global averages; the second is to champion electric cars (for that read, domestically owned and produced electric cars) and diminish conventional, internal combustion engine (ice) cars. If they can achieve that they reduce capital outflows on both cars and oil, reduce pollution and support domestic car makers. As far as the Government of the PRC is concerned, independent dealers may or may not have a part to play in any future distribution arrangements.

Legislators act against motor industry cartels

In the EU legislators also seem agnostic to dealers. Their primary focus is on competition and consumer benefits. So, the latest round of Motor Vehicle Block Exemption regulations focus on curbing vertical and horizontal  monopolies, whoever creates them. They impose so-called ‘hardcore’ exclusions of anti-competitive activity, promote investigations to penalise cartels and  have forced open the after market to new entrants. They want access as wide as the new and used vehicle market, commensurate with consumer protection and road safety. However, even with a broadly supportive legislative environment, dealer numbers are falling. Is this because their business model is under pressure? If so, what are the combination of market and financial forces ranged against it? Three spring to mind – over production, the decline in after sales and digital and social media.

Production Over-Capacity

Dealer profits hit by over capacity.

Emerging markets build new capacity.

Even within a steadily expanding global car market, there is little room for improving dealer gross margins primarily because there is considerable over-supply. Euler Hermes, the trade credit insurer, reported in 2014 that the EU had excess capacity of 6MN units alone. An earlier report by the UK Government suggested in 2009 that excess capacity globally was 20MN units – as much as is produced in the EU alone. Industry insiders estimated that in 2015, while some premium car makers are at capacity of 90% or more, many of the volume brands are operating below 80%. Two factors have created this. First, threatened plant closures quickly become a major political issue with risks for brand reputation, other plants in the OEM’s supply chain and government popularity. Given these difficulties auto manufacturers, aware that they employ  a lot of people, look to the EU to assist rather than using their own funds to finance plant closures. Just as importantly, in the short term, the premium car makers see this as ‘not their problem’. The EU market has restructured from a premium segment of 20% to 30% of total registrations so premium brands have no incentive to cut capacity at present. Coupled with that, there is no ‘1st Mover Advantage’ – the first car maker to close a plant would be alone and take the total loss of sales volume. Second, just as car makers in the US, Japan and the EU face over-capacity, China is investing heavily in new plant. They have  fewer legacy assets, so it is less expensive for them to close, small, inefficient plants with conventional engine technology and build new ones focused on emerging electric and autonomous car technologies. In simple terms, if the EU, Japan and the US close plants, China is likely to build new ones and…perhaps… takes market share.

At the single site dealer level the impact of over supply goes beyond the added cost of excessive stock levels and manufacturer volume targets which result in higher marketing costs, discounting, lower gross profits and, missed volume bonuses. Added to these are the additional costs of dealer standards as brands attempt to differentiate the buying experience while the vehicles  become increasingly alike as technologies converge and OEM’s try to match their competitors like-for-like in each segment. The outcome for many has been rising costs, longer payback periods for investments and smaller gross margins. However, for dealer groups with access to large credit pools, the scale to negotiate terms with OEM’s and deliver back-office economies, the business can still be cash neutral and provide adequate profits to acquire struggling businesses. However, this situation may be unsustainable, even for many dealer groups in the long run.

Declining After Sales Income

Car Price Inflation vs Adter Sales Price Inflation

UK New Car Prices rise slower than inflation for the last two decades

Whether you bought a new car in the US or the EU, over the last twenty years the price of the car rose slower than the average CPI inflation rate. That is not true of fuel and oil prices… and nor is it true of after market costs. The primary drivers of aftermarket price inflation seem to be two-fold. First of all, dealers are unable to absorb the twin effects of declining service hours and parts sold per vehicle during the warranty period coupled with rising overhead costs . The UK’s Royal Automobile Club Motoring Price Index indicates that, while new car purchase prices have fallen by over 10%,  vehicle maintenance has risen 38%+ over 10 years. In the US, the American Automobile Association (AAA) driving cost survey shows a similar trend. It reports that average car maintenance costs rose from 4.47 c/mile in 2012 to 7.91 c/mile in 2017. If they had matched the US CPI they would have risen to 4.85 c/mile over the same period.

Secondly, the change in the vehicle life-cycle leading to earlier onset of uneconomic repair. A 2014 report by the UK’s SMMT revealed that there were almost 32MN cars in use in the UK and the average age had risen to almost 8 years. It found that cars were being scrapped in significant

Uneconomic Repair

Example of Uneconomic Repair for Upper Medium Fleet Vehicle

numbers when they were between 10 and 20 years old. This accords with industry analysts who suggest that, beyond the warranty period, the key factor in a vehicle’s life is the point when it requires an uneconomic repair – where the cost of repair approaches close to the vehicles residual value. The implications of these changes when coupled with over-supply, greater model proliferation and shorter product cycles have been significant for dealers, even if developments in electric and hybrid cars are ignored.

Declining Residual Values meet Inflating After Market Prices: The table shows sample data using typical values for an Upper Medium Fleet Vehicle. Assuming that this vehicle required an uninsured repair of around £3000 including VAT, it would be uneconomic to repair at 6 years or more for a private owner and never for a dealer or trader.

Too much of a good thing: Trade-offs in the Parts Department

The sales and marketing argument is undeniable: the more you segment your market, the better your products will match customer’s needs. Assuming you build the products they want, customers will like that, so sales will increase. That is the logic behind the product proliferation that is occurring apace in motor manufacturing. On the other hand, the range of parts that you need to stock rises sharply as those new models enter the market, more especially if you reduce the model life cycle as well for the new range. But, you’ll sell more parts? Perhaps. However, your fill rate will only rise if you have the correct parts in stock. Just because you sell 5 models instead of 3 or stock 40% more parts doesn’t guarantee that your parts sales will rise by 40%.

But, one thing is certain, you will have to stock more parts lines. Imagine an OEM’s currently has 100,000 parts lines in their ‘parts basket’ and, given local demand,  it is only economic for a dealer to stock a small proportion of them, say 4,000 lines but can still meet a high fill rate. What happens when significantly more models are launched over a period? The parts department will have to increase its stocked lines, maybe to 6,000, to maintain its fill rate but sales are unlikely to rise proportionally. In financial terms, the investment in stock will rise faster than sales, so stock turn will fall. If you are a single site dealer product proliferation may well lead to unavoidable extra costs. If you are a dealer group with multiple outlets for the same brand, you may be able to pool stock and eliminate most of the extra costs.

 

Third Way: Ownership to Mobility 2020 – 2050

Future of the car dealer

Levels of Vehicle Automation SMMT/KPMG

There is an emerging consensus from car makers and industry experts about the technological future of the automobile. In a recent UK SMMT commissioned report, prepared by KPMG, they described five levels of automation coming into existence over the next thirty years. At level 1, the driver always remains in control of speed and direction, even though there are information and systems available to assist if required. At each succeeding level the driver gives up part of the control and, at level 5, the driver gives up control entirely to the autonomous vehicle and becomes a passenger just enjoying he show. Implicit in their vision is a transition from conventional ‘ice’ engines (internal combustion engines) through hybrid to electric and perhaps other zero emission drive types. In parallel with this evolution is the emergence of a different role for the car. It will be connected to the ‘internet of things’ – carry out its own fault diagnosis, find and book parking spaces, avoid accidents, reduce traffic congestion and, eventually, be a place of entertainment. Just as smart phones do much more than make calls, autonomous cars will be mobile work or play stations as required.

From a dealer viewpoint the change in vehicle technology may bring fundamental developments in their business model: one is falling service and maintenance income. Electric engines only have six or seven moving parts, limited brake wear, no air filter, oil and

IEA Blue Roadmap

Electric vehicle adoption forecast by International Energy Authority (IEA)

filter, exhaust system, spark plugs and fluids. They have no alternator; battery (in the conventional sense); clutch; fuel filter; fuel injectors and pump; engine mountings; O2 sensors; power steering fluid (it uses electrical assistance); radiator and assorted pipework; serpentine belt; spark plug wires; starter motor; thermostat; timing belt; anything to do with regular transmissions (adjustment, fluids, filters) and no water pump. A 2012 study for the Institute for Automotive Research (IFA) suggested that electric cars would deliver service and maintenance cost savings of around 25% to their owners. Nissan estimate the servicing of a Leaf is around ⅓ the monthly cost of an equivalent Ford Focus. Of course, the impact will be seen at a pace linked to the adoption of electric vehicles – see IEA Roadmap – but a recent US study forecasts 65-75% electric vehicle adoption in the US by 2050  – significant, albeit lower than the IEA global forecast.

The Electric Vehicle Transportation Centre (EVTC), a research arm of the US Department of Transportation has supported this view based on US ownership costs for a range of comparable vehicles. With or without the US government’s electric vehicle incentive, in their opinion, electric vehicles are cheaper to own than a comparable conventional engine car over 5 years.

Few of us are left in any doubt about car manufacturer’s preferred direction of travel even though there are considerable technological obstacles still to be resolved: Battery life and replacement cost; driving range;charging infrastructure and charging time; high purchase cost without subsidies; and, switching costs if oil prices remain low. But, manufacturers are not making this investment due to altruism. They want people to buy and own cars. Preferably theirs. They are just not sure if they will, for two reasons: 1. Driving license rates are falling among young people across the developed world; 2. The political support for car-centred cities is fading. Politicians still want personal mobility but without cars parked in street and polluting the air.

Starting with driving license rates, a recent study of the University of Michigan found three main findings concerning US drivers: 1. For 16-through 44-year-olds, there was a continuous decrease in the percentage of people with a driver’s license between 1983 and 2014. For example, the percentage for 20-to 24-year-olds with driving licenses in 1983 was 82% By 2014 it had fallen to 74.6%. For 45- through 69-year-olds, there was an increase in the percentage of people with a driver’s license from 1983 to 2008, followed by continuous decreases from 2008 to 2014. For those 70 years and older, there was an increase in the percentage of people with a driver’s license from 1983 to 2011, followed by decrease from 2011 to 2014. A second study by the same team on 15 countries found that, over time, the number of older drivers increased, due to the ageing of the population but that there was a drop in half the countries, including the US and the UK, among younger drivers over time. They are more likely to contact their friends via the internet or social media  rather than driving to meet with them. The 2014 National Travel Survey by the UK DOT showed  similar trends. The increase in driving licence holding has been greatest among older age groups. The proportion of young adults (aged 17-20) with a full driving licence has decreased since the 1990s when it was highest for this age group. The proportion of 17-20 year-olds with licences is now similar to the level of the mid 1970s.

Lyon France. Photograph Alemy

Politicians, especially those in cities all over the world, are in a dilemma. At the national level, tax receipts from cars are a significant proportion of the national budget. At the local level, cars are mostly a cost. The ACEA Passenger Car Fact Sheet 2016 reports that production and use of cars generates €350BN in taxes, around 8% of the EU total and it employs 12.6MN people,almost 6% of the total employed. On the other hand, at the regional and city level, politicians are  already legislating for a bright new future without car parks and car spaces and not only for environmental reasons. Many large cities see Manhattan as the model, not Los Angeles. Buildings are higher and population density is higher. People live close to where they work and the density of population allows services to be located within walking distance economically. No need for edge of town shopping centres with acres of empty car parking spaces. Public transport infrastructure is better and a mix of inducements and penalties make inhabitants less car dependent. Think, for the moment from the viewpoint of a city mayor. Would you prefer to invest in more unproductive assets (roads, car parks, parking spaces and garages), which also contribute too congestion and pollution, or into more productive ones (housing, offices and public amenities), which expands the local tax base? You choose.

The Future for Car Dealers

Impacts on Dealer Network of Vehicle Technology Evolution and Mobility Services LGA 2017

There are three likely scenarios: ‘Business as Usual’,  ‘Mobility rather than Ownership’ and ‘Electric Connected to Autonomous’.

In the ‘Business as Usual‘ scenario there is a consistent transition away from conventional engine cars to hybrid and electric cars. The pace depends on many factors – some technical, such as battery technology, some economic, like the price of oil and the cost to switch, and finally, some political factors including the financial incentives to reduce oil imports, voter attitudes to pollution and the viability of mass transit alternatives. However, electric vehicle technology alone will not change the business model for dealers or dealer groups, although it may impair after-sales profitability. If it’s ‘Business As Usual’ for car dealers – that is, conventional engines remain the choice – or not, consolidation of dealer ownership is likely to continue and so will dealerships. The dealer groups will likely be more dominant. However, with so much global political capital and money being invested in subsidizing electric vehicle adoption, EV’s and PHEV’s are likely to become widespread, even without a breakthrough in battery life and costs.

In the ‘Mobility rather than Ownership‘ scenario there is a transition away from ownership through leasing to mobility as the financial basis for vehicle use. This scenario positions attitudes to vehicle ownership as the decisive factor in the medium term? Widespread individual vehicle ownership is critical for a dealership based distribution network to be viable. Existing urban centres are built around the car. The historic investments in the 20th century which shaped much of the urban landscape – roads, residential and shopping developments, parking and town planning – took place because political decisions reflected voter desires. In the half-century up to 2000, the voter wanted to own a car. Since then, a small but growing number have preferred to own a smartphone rather than a car. Many of the younger generation may want to use a car when it’s convenient, but not own one. At least, that’s true if they live in a city. Car ownership may no longer define their status or aspirations. Fewer of them may see a future living in the suburbs and commuting to work. A growing number might want to live close to where they work, connect via social media and shop locally. For that group, mobility as a service may be a preferable choice rather than ownership. If voters start to value convenient mobility above car ownership, adept politicians will want to give it to them.

In any event, the first step in the transition from ownership to use – leasing – is already mainstream in many developed markets. Personal Contract Purchase agreements in the UK were estimated by the SMMT in 2015 at around 60% of total new car retail sales. By 2017 The Guardian reported that it had risen to 90% of total new car retail sales in the UK. In 2017, a report by Grant Thornton for the Society of the Irish Motor Industry (SIMI) estimated that between 65 – 70%  of new car sales were based on PCP contracts in Ireland. In the US, PCP and leasing is estimated to account for 25% of new car sales. While PCP and leasing contracts are more significant in mature, rather than developing, markets at present, they do signal a move away from outright ownership towards use or mobility. Politicians already want urban centred drivers to consider car use as simply one of several acceptable transport modes. A range of research reports since 2012 show that annual miles driven in cars is falling and the numbers of journeys by car are also declining in some city centres. Partially this reflects anti-car policies and dis-incentives, rather than personal choice, but its effect may be the same: to make car ownership increasingly uneconomic in favour of mobility.

Of course, these younger voters may change their mind in the future. They may want to live out of town and own a car when they start having families. If they do, car dealers can heave a sigh of relief. The retail market may be smaller, but it would remain significant and they will still be in business.  However, if they don’t want to be commuters, the profitability for many dealerships may be reduced, irrespective of the vehicle technology. If users do not want to own a car at all, they may want mobility on demand. If that model became dominant there would be few retail customers. Vehicle sales would be primarily a B2B business. In the UK the car market is already 55% B2B. In the US it’s around 30% B2B. If that proportion grew, some OEM’s might re-consider the costs and benefits of an out-sourced distribution system. If the transactions are primarily to rental companies and other large mobility fleets, why not do it in house? Keep in mind, the gamble by Tesla. They don’t want a dealer network at all. They want to sell direct.

Cities built around cars

Credit: California Historical Society Collection USC Libraries

The ‘Electric Connected to Autonomous‘ scenario is further off in time – 2030 to 2050 for mass market involvement and has even more technical challenges to overcome before it becomes a reality – if ever. Not only must the technological handicaps of electric vehicles be overcome, so too must those of autonomous vehicles. The electric charging and autonomous vehicle infrastructure has yet to be built. Regulatory frameworks must also be re-negotiated for both connected and autonomous vehicles to deliver their benefits. The insurance for cars will shift from a personal liability to a product liability framework, according to KPMG. These issues will take some years to resolve…but that doesn’t mean it won’t happen. In 2014, Carlos Ghosn, president and CEO of Nissan predicted four factors would drive the demand for autonomous vehicle technologies. Among them were the growth of global mega-cities, where space, congestion and pollution issues need to solved and the growing demographic of older people who want to be mobile for longer. Others have cited the potential for accident reduction as a key factor. In the US alone 33,000 die each year in auto-related accidents.

There are also ‘early adopters’ in the wings. Both Uber and Lyft, the ride-hailing services are co-investors in autonomous vehicles alongside Volvo and GM, respectively. What is less well-known is why. The main reason is economic – autonomous vehicles are expected to cost almost half of a conventional car – 42 cents vs. 81 cents per mile – to operate. In contrast to Elon Musk of Tesla, who predicts that autonomous car owners will rent their car when they are not using it, John Zimmer of Lyft thinks differently: First, the cost of owning a car will be twice that of ride-hailing for the same mileage. Second, cars in cities are only used 4% of the time that they are owned. The rest of the time they are expensively parked somewhere. If people switched to mobility packages, the productivity of each individual vehicle should rise. Third, urban planners will seize the benefits of freeing up space from cars and diverting it to other more productive uses.  Zimmer thinks that few will own a car in a city or the suburbs by 2035. While, they may disagree on the timing, many other pundits broadly agree: mobility will slowly replace ownership when autonomous cars are widely available for city-dwellers well-served by service providers. So, in the longer term, if and when the much heralded autonomous cars arrive, few city and suburban dwellers may want to own one at all. But, that still leaves families and country-dwellers who may prefer their personal cars on-demand and those who want the status that car ownership confers. But, over time, even  for them countrywide service levels will improve and so will familiarity with mobility services. If so, autonomous cars might be like aeroplanes today. No-one except corporations and the super-rich aspire to own one. The rest of us simply rent one when we need it. The viability of the business model for traditional dealerships, large or small,  will be hurt and may even be undermined whichever scenario turns into a reality.

 

 

 

 

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