The Car Dealership Crisis: Navigating the Challenges Ahead

The automotive industry faces significant survival pressures, especially since the beginning of 2020. In a recent gathering of car dealership investors, many attendees appeared burdened by the weight of current challenges. In a previous article, I predicted that over 8,000 4S dealerships had closed since 2020, and in the next five years, another 10,000 may shut down, leading to a potentially stabilized but drastically reduced number of dealerships by 2028. The golden age of the 4S industry, which saw traditional investors, mainly from the 60s and 70s generation, flourish during the market's rise in the late 1990s, seems to be fading. These investors often relied on 'connections' to secure dealership rights, rather than on a deep understanding of modern business competition. As the industry evolves, the focus is shifting towards high-quality talent, innovation, and comprehensive skillsets instead of mere relationship-based successes. As the industry enters a challenging phase, many investors are now grappling with losses and navigating staff restructuring. The crux of their dilemma lies in how to choose the right personnel amidst these changes. I recommend categorizing employees based on two dimensions: virtue and talent. This method allows for a more structured approach in retaining valuable team members. In an environment where profitability is diminishing, the ability to attract and retain talent becomes critical. Salary, emotional connection, and career development form the trifecta of employee retention strategies. Salary alone may not suffice, especially when most dealership owners are experiencing significant financial losses and face the challenge of maintaining competitive compensation structures. Emotional retention goes beyond superficial gestures; it requires prioritizing employee satisfaction and dignity, which can significantly impact morale. Career retention involves providing employees with the necessary training and opportunities to progress, transforming underperformers into valuable assets for the company. As the older generation of dealership investors gradually steps back, their unique experiences and insights remain invaluable to the industry. They continue to navigate turbulent waters, embodying the essence of real business management. Regardless of outcomes, their journeys represent significant societal contributions and should be acknowledged.