Car dealerships are an American institution. Often controlled by a patriarch with an unusual amount of sway in the local community (and their sometimes cosseted children), dealer franchises dot the country’s landscape like moles on a back. Isolated near exit ramps, they serve as gleaming beacons of civilization as you traverse through long expanses of wilderness on a road trip.
North America wouldn’t be the same without them but, according to one automotive regent, irreparable change is coming to the dealer networks we’ve become begrudgingly accustomed to. Bill McDaniels, president of McDaniels Automotive Group, runs a half-dozen stores selling selling Acura, Audi, Porsche, Subaru, and Volkswagen-branded vehicles in South Carolina. He’s one of those automotive viceroys mentioned earlier, right down to having his son as the chief operating officer for his business, and he’s convinced the era of family-owned dealerships is almost over.
Is this one man’s paranoid delusion or an astute observation of industrywide trends?
Speaking with Automotive News, McDaniels expressed his concerns while ironically describing his expanding automotive empire. Having been in the car sales business since 1969, Bill has branched out into real estate and uses income from his home-building projects to purchase existing centers and remodel his own.
“I want to build nice stuff. You don’t have to beat me in the head to spend money,” McDaniels explained. “I want it to look like a nice product when it’s finished. Most car dealers, they don’t care. [The dealership] is just the box. [Their attitude is] ‘I got the manufacturer off of me. So I’m done. I’ll go fly my jet or whatever. And I’ll see you when the building is finished.’”
“But I think the way I grew up, the way I started in the car business, there are very few of us left,” he continued. “And there are going to be fewer as time goes by.”
There’s certainly cause for concern. Since the 1990s, large retailers have moved in on local dealers — stealing large chucks of their business. CarMax is the prime example but it is by no means the only one.
“I see the future of the car industry being controlled by maybe a dozen companies like the Penskes, the Asbury group, the big groups. I see them actually owning everything in the car industry,” said McDaniels. “I also see that down the road, once the dust settles, the car business will become an Amazon.com. That’s where you order the cars exactly the way you want them. They send it to a service facility and you go there and pick [up] your car. There will not be a salesperson.”
“But Mr. Customer, I hate to tell you, there’s no negotiation either on that,” he added. “Because they are going to control the pricing once they monopolize the market.”
At this point, the interview takes a turn from one man’s musing to a prospective cautionary tale. It would be easy to accuse him of being an old blowhard, but Tesla is already adopting a business model very much like the one McDaniels describes. Tesla isn’t alone either. Lynk & Co wants to conduct sales in a similar manner and is concerned as to whether or not it can get away it in North America.
“And I’ve got some news for the manufacturer: These groups that control that market, they’re going to tell you what kind of car to build and how to build it,” he went on. “So it’s just like the Walmarts, like the Lowe’s, like Home Depot. They have destroyed the small business person in the market. Because Home Depot or Lowe’s, they never pay for anything on their shelves until they sell it. It’s all on consignment. It’s a pretty neat deal.”
It’s Revelations in the automotive bible. While perhaps overly dramatic, you can kind of see things slanting that way if enough goes according to McDaniels’ worst-case scenario. Realistically, small-town dealerships will continue losing ground to the big boys. That has been the trend of late and, even though there’s no sign of an overnight nationwide takeover, that could be the end game if things don’t eventually change.
As for our South Carolinian businessman, he says he plans on being raptured if these truly are the final days of the local car dealership. He’s going to ascend to a green heaven where everything is made of money but true joy is absent.
“I hope a bigger group visits me. And they see all-new buildings,” McDaniels said. “They don’t have to worry about building new facilities. They think they can run it better and more efficient, and I want them to. I just want them to pay me first. So yeah, eventually, in the very near future, I would welcome some of those big boys to come in and write me my big check. And I’ll ride off into the sunset. But it will probably be the saddest day of my life because I really love the car business and it’s fun.”