Idea: Car Dealership Business Model
As we continue watching JIT systems crash (a function of credit intensity) we’re also going to see other credit intensive systems start to deteriorate and enter decline periods.
Currently, Chrysler is paving the way forward for car dealerships by abruptly shutting them down. What should a dealer do in this environment? Many will die, others will consolidate, and still others will experience vertical momentum (either up- or down-market).
Here’s some smart thinking for those who want to survive:
- Dealerships are platforms. Services provided include: targeted information streams, maintenance, and large chunk of land for inventory management. Time to add value to those services. Think of your business having just lost its primary flow source (your largest customer, the builder of the car).
- Current model relies on a large chunk of land that allows for directed swarming (on the part of semi-independent salesmen and interested customers). Offload the costs of this swarming (embrace the crowd). For example: Let individuals looking to sell used cars place their vehicles on your land and you sell them in exchange for a commission. You already pay your sales staff commission only.
- Yes, the only thing you may have left is a the husk of your business plan – your land. Repurpose as much as you can. Rip up the concrete to enable other uses (storage, food growth, fruit stands, soccer fields with concession stands, whatever). Large buildings can be used for local manufacturing or office-share systems.
- Maintenance of the current vehicle fleet may be your only source of revenue. Get good at it, with an enhanced reputation. Try to absorb local cheap mechanics with great reputations, offer them greater shares and put your targeted information flows (sales team) to work building them business. Again, you may only provide the tools and land, but its better than zero.
With this, you’ll be able to sustain a living. Probably not the absurd level you’ve been used to, but you’ll get by, unless you can totally rethink your business and get lucky.
-Shlok
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