The Dealership Extinction Event
How direct sales and digital experiences are rewiring automotive retail
According to research on automotive market trends, while most car sales today start online, more than 95% of purchases still happen at the dealership. This statistic masks a fundamental shift happening beneath the surface: the dealership's role is being hollowed out even as it remains the point of final transaction.
As consumer demand for new vehicles is being pulled forward, for fear of tariff-related price increases, we are likely to see near term gains in unit sales, as well as front and back PVR. But this short-term boost obscures the longer-term disruption of traditional automotive retail models.
Tesla proved that customers will travel hundreds of miles for the right buying experience. Now, traditional automakers are learning that the physical location matters less than the quality of the digital journey leading up to it. Automotive marketing budgets have been tight lately, but the purse strings may loosen soon. Auto advertising trends suggest spending by car manufacturers and dealerships on digital ads will increase 11% in 2024.
The winning model isn't pure direct-to-consumer—it's "digitally orchestrated physical delivery." Customers want to research, configure, and finance online, then have a seamless, pre-arranged experience when they physically take possession. The dealerships that survive will be those that excel at this final, critical touchpoint rather than trying to control the entire sales process.
The real disruption isn't the elimination of physical locations—it's the redistribution of value within the sales process. The companies that recognize this shift and optimize for it will capture the margins that traditional dealership models are losing.
Sources:
Invoca Automotive Industry Trends 2024
JMA Group Automotive Trends Report Q1 2025
Progressive Automotive Industry Trends 2024