Automotive retail is changing. The days of travelling to a giant dealership, dealing with a pushy salesman, and leaving feeling like you got ripped off are slowly becoming a thing of the past. On top of this, other retailers in the automotive industry are seeing another shift: Electric vehicles (EVs). In less than 10 years, we will be driving EVs and not requiring a stop at the traditional gas station. What does mean for the industry?
The car dealership model has a long history, with the first dealership in the United States dating back to 1898. The dealership model allows for manufacturers to expand rapidly throughout various territories through these franchised retailers. There are now strict “Dealer Franchise Laws” to prevent automotive manufacturers from moving into areas where dealers already exist and run them out of business. Other countries, like Canada, followed suit. This model has been stress tested with improvements in online shopping, and by manufacturers like Tesla, who have fought with plenty of governmental bodies to have no dealerships, and still sell vehicles.
Over the past few years, we have been seeing dealerships and automotive retail taking over small format spaces. Close to home, at Yorkdale Mall in Toronto, there are 3 tenants currently selling vehicles (Lucid, Tesla, and Vinfast). Most offer the experience of test driving from the parking lot, with transactions and decision-making being done inside the shopping centre. Upon ordering, the vehicle simply gets dropped off at your house, similar to other online shopping.
The small formats and challenges that manufacturers like Tesla have been fighting for may move automotive retailer away from dealerships all together. “Automotive Experience Centres” are making dealerships show their age, and supply chain restraints are also rendering the concepts unprofitable. We may begin to see legislation changes that allow for more flexibility of selling formats in the automotive sector.
2. Gas Stations
Now some quick math:
- Canada has stated that the sale of new gas-powered vehicles will be prohibited starting in 2030 (which could also be pushed up as gas prices continue to rise).
- There are currently approximately 12,000 gas stations in Canada.
- Mainly due to harsh weather, the average lifespan of vehicles in Canada is 12.88 years.
- Therefore, gas stations could be rendered obsolete by around 2042. Said more simply, 12,000 gas stations have under 20 years to completely pivot their businesses.
Many current EV users simply charge at night, eliminating most of the need to go to charging stations. This is a huge advantage of EVs, but there is a glaring problem as adoption increases: Infrastructure. Ontario and the rest of Canada’s infrastructure is insufficient and will not be able to handle the approximately 30 million drivers (the current number of gas vehicles on the road in Canada currently) charging at the same “off-peak” time overnight. Add the fact that the Pickering Generating Station powerplant by 2028, Ontario is in desperate need of repair, and this charging pattern is even less likely. The fact is people will be using charging stations similar to how they use gas stations currently.
This sounds scary, but there is the ability to pivot to experience centres. In Canada, Petro-Canada has begun this movement already, by beginning the development of “Canada’s Electric Highway” where they have already setup EV charging every 250 km or less from Halifax, N.S. to Victoria, B.C.
3. From Convenience to Experience
In a study with 500 Nissan Leafs (their version of the EV), charging was shown to be much slower at cooler temperatures. It took 30 minutes to charge to 80% at 77 degrees, but at 32 degrees, the vehicles were only able to charge to 44%. Being in a colder climate, like the majority of Canada for half of the year, requires vehicles longer to charge. Therefore, there needs to be something to do while you wait. Starbucks had already considered this throughout the Pacific Northwest.
Starbucks is in the process of implementing EV charging at locations along the Seattle to Denver route. People will wait for their vehicles to charge, be able to relax, have a beverage/snack, and enjoy their time at Starbucks.
We expect this trend to pick-up as EVs become the majority over gas powered, and more non-automotive retailers attempt to enter the “EV Station” market.
It is clear that automotive retail will look a lot different in the coming decades as it does now. The bright side of this is there the time to innovate!
Please reach out to our trusted advisors at JCWG for help in developing your – automotive strategy – “Dealership of the Future” or your “Future Charging Centre”, blending retail, food, EV charging, and maybe even a workshare. Did you know we also offer automotive themed retail tours? Reach out for more information.