Report predicts car dealerships could be shutting doors within a decade
In a study put forth by RethinkX, authors James Arbib and Tony Seba have boldly stated that many North American car dealerships will be out of business in as little as seven years.
Arbib, a technology investor, and Seba, a Stanford University economist, believe this sharp decline in the automotive industry will be in response to the rise of electric vehicles and ride sharing. Many others have predicted the eventual fall of dealerships, however, none have said that the end would come so quickly as Arbib and Seba.
The pair have predicted that the initial cost of purchasing an electric vehicle will soon drop significantly, and in the long run they will cost less to maintain.
"You only have 20 moving parts in the power train of an electric vehicle, but 2,000 in the power train of a gasoline vehicle, so there is far less to go wrong," stated Arbib, explaining that an electric vehicle would need fewer trips to the dealerships for maintenance and repairs.
According to the Canadian Automotive Association, the average maintenance cost per year for a gasoline-powered vehicle is $1000, and that number only grows the older the car becomes. Most dealerships offer a 60,000-kilometer warranty on new cars. In contrast, Tesla is offering infinite kilometer warranties on their electric cars.
“It's the radically lower cost that we think really drives the speed and the adoption scale of this disruption we're forecasting.” said Arbib.
This report, however, is contradictory to the trends in the current Canadian automotive market. Car and truck sales are booming and the dealership job industry is thriving. According to Doug Heeney, a sales manager at Campbell Ford in Ottawa, business has never been better.
While Henney does agree that electric cars are the way our future is headed, he doesn’t believe it will have the impact Arbib and Seba are predicting.