Auto execs predict more reliance on dealers for brand success

Automaker executives expect the car industry to be a higher volume, lower margin game, with dealers playing a bigger role in brand success.

The big picture: By and large, manufacturing execs believe the car business will continue to normalize but much slower than last year, according to the 2024 Kerrigan OEM Survey.

• While most still think dealership profits will decline, 41% of respondents expect they’ll stay roughly the same, up from 24% a year ago.

• When it comes to retail sales executives are mostly optimistic. Yet 70% expect days’ supply to rise quickly, hitting 60-90 days.

• Electric vehicles have disappointed automaker leaders, only 36% of whom think their company’s electrification goals are achievable. Many are making backup plans for ICE cars to be safe.

Zooming in: The dynamics between dealers and manufacturers have changed a lot since 2023. With EV sales rising slower than expected, automakers believe dealers are their best bet for selling gas-powered cars.

• Last year, most believed the agency model could hit the U.S. as early as 2028, with only 34% feeling differently. Today, more than half (57%) are confident that won’t happen.

• With EVs taking a backseat, 60% think dealership facility standards will stay the same, up eight percentage points from 2023.

• Most respondents (67%) still believe that the buyer relationship and customer data will be shared between automakers and dealers.

Bottom line: The slow EV transition seems to have made an impact on how auto execs view the industry. While some challenges, like tighter margins, are to be expected, it’s a good sign that this is leading to more trust in the franchise model.

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