Honda Thinks EVs Will Kill Mega-Dealerships

Honda dealerships will allegedly be smaller and more focused in the age of EVsImage: Honda

Honda is planning big changes at its dealerships as the release of the Honda Prologue looms. Honda wants more EV chargers, more flexible spaces and an updated buying process that’s more in line with what buyers expect when buying an electric car in 2022 and beyond. For Honda, that updated process involves less EV inventory, less dealer space and smaller dealerships overall.

Finally, the automotive megaplex is dead. Or, at least, it’s slowly dying as a business model that’s feeling competition from online car shopping and direct sales, which EV companies like Tesla and Rivian proved are not only viable, but profitable, too. So profitable, in fact, that Ford and Volvo went with direct sales (via the web) for their own EVs: the Mustang Mach-E, F-150 Lightning and C40 Recharge, respectively. Now, Honda wants in on the virtual showroom.

So Honda plans to redesign dealerships into modern retail spaces that are basically terminals along the way to EV ownership, not destinations. The smaller dealerships Honda envisions would be where buyers pick up their new EV after completing the purchase online, or where EV owners go for infrequent service.

Wired has an extensive and fascinating look at the “shrinking dealership,” and I encourage you to go read this broad examination into the digitalization of car buying. It outlines how online car buying grew by 25 percent in 2021, and argues that the comfort buyers gained with online car purchases will probably outlast pandemic lockdowns.

Of course, I’ll venture a guess that you’ve heard this argument before: Car sales shifting online! Dealerships dead! Vi-de-o killed the dealership star. Hmm. But, really, have you seen how many dealerships have YouTube channels lately?

The internet-savvy ones do, at least. Meanwhile, the ones that aren’t so forward-thinking get bought out and are consolidated into mega dealerships coasting on high profit margins from the last few years. These expansions, however, are not exactly sustainable. At some point, mega dealerships reach critical mass and get dragged down by what seemed to buoy them before: rows and rows of cars, inventory that costs money to source, store, and secure. And who’s to say they’re all vehicles that buyers will want?

Better to know exactly what cars you’re selling and to whom — through online reservations — than to have cars languish and eventually sell at a discount. In Honda’s envisioning, columns of unclaimed cars could be replaced by earmarked EV deliveries waiting curbside for the buyers who configured them exactly as desired.

Since we’re still in the early days of digitalization, Honda’s proposed redesigns for those sprawling dealerships are only suggestions for now. None of its dealers will be forced to adopt any changes. Not just yet.

Image: Honda