S4E20 - Dealership Profitability & Disruption: What’s Ahead in 2026
About this episode
Steve Greenfield, a prominent figure in the automotive industry, shares insights on dealership profitability and the future landscape of automotive retail. He discusses the challenges of affordability, the impact of supply chain disruptions, and the evolving role of technology, particularly AI, in enhancing dealership operations. Greenfield emphasizes the importance of focusing on controllable factors for dealers and predicts that the franchise dealer model will remain resilient despite emerging direct-to-consumer brands. His unique perspective, combined with anecdotes about his love for cats, makes for an engaging conversation.
Steve Greenfield, GP at Automotive Ventures, shares his perspective on affordability challenges, dealership profitability, emerging retail tech, and how AI may shape the future of customer experience and operational efficiency.
For more information about our guest, visit their LinkedIn.
Episode Breakdown
0:00 - Meet Steve of Automotive Ventures!
0:53 - The state of vehicle affordability and consumer credit
4:00 - Supply chain fragility and new chip constraints
6:19 - What dealers can control to protect profitability
8:05 - DMS disruption and evaluating tech investments
11:10 - The surge of AI and where it will actually help
13:20 - How AI can unlock sales productivity & loyalty
18:33 - Autonomous ride-hailing and its real implications
22:20 - The durability of the franchise dealer model
24:08 - Best Bets: Profit margins, valuations, direct sales & BYD
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MSRP
"...that we continue to see cars coming back three, four years after COVID that were sold far above MSRP, where consumers are shocked at just how dramatically underwater they are."
MSRP is the price that the car manufacturer suggests you should pay for a new vehicle. It's like a starting point for how much a car should cost, but the actual price can be higher or lower depending on the dealership.
MSRP stands for Manufacturer's Suggested Retail Price, which is the price that the manufacturer recommends for a vehicle. It serves as a benchmark for pricing but can vary based on dealer markups or discounts.
negative equity
"...shocked at just how dramatically underwater they are. I have all this negative equity that when they buy a new car, they've got to roll into..."
Negative equity means you owe more money on your car loan than what your car is currently worth. This can happen if the car loses value quickly or if you bought it for more than its market price.
Negative equity occurs when a vehicle's market value is less than the amount owed on its financing. This situation can arise when a car depreciates faster than the owner pays down the loan.
autonomous vehicles
"But so the autonomous thing is interesting. I'm not threatened that it's going to replace car ownership and like everyone's going to go to autonomous ride, hailing and no one's going to own a car."
Autonomous vehicles are cars that can drive themselves without needing a person to control them. They use technology to see and understand the road, so they can drive safely on their own.
Autonomous vehicles are cars or trucks that are capable of navigating and driving themselves without human intervention. They use a combination of sensors, cameras, and artificial intelligence to understand their surroundings and make driving decisions.
Waymo
"I'm just going to hop in one of these autonomous vehicles powered by Waymo or whomever and it may start to substitute a significant proportion of the miles"
Waymo is a company that makes self-driving cars. They are working on technology that allows cars to drive themselves without a human driver.
Waymo is a subsidiary of Alphabet Inc. that focuses on developing self-driving technology. They are known for their autonomous vehicle services and have been testing their technology in various urban environments.
autonomy
"For example, one of the benefits of as we move more towards autonomy. So autonomy is one that I was a doubter, but now I'm a believer having sat in some of these Waymo's."
Autonomy means that a car can drive itself without needing a person to control it. It's a technology that uses computers and sensors to navigate and make decisions on the road.
Autonomy in vehicles refers to the capability of a car to drive itself without human intervention, utilizing advanced technologies such as sensors, cameras, and artificial intelligence. This technology is often associated with self-driving cars and is rapidly evolving in the automotive industry.
Volkswagen
"...we still hear Scout, which is owned by Volkswagen, launching their new vehicle..."
Volkswagen is a well-known car company from Germany that makes many different types of cars, like the Beetle and Golf.
Volkswagen is a German automotive manufacturer known for producing a wide range of vehicles, including the iconic Beetle and the Golf. The brand is part of the larger Volkswagen Group, which includes several other car brands.
Afila
"...We have this Afila car, which is the joint venture between Honda and Sony..."
Afila is a new car being made by Honda and Sony together, focusing on technology and entertainment for drivers.
Afila is a new vehicle developed as a joint venture between Honda and Sony, aiming to integrate advanced technology and entertainment features into the driving experience.
franchise dealer model
"...going through the franchise dealer model is just the most effective way to sell and service cars in their local communities."
The franchise dealer model is how most car companies sell their cars through local dealerships instead of selling directly to customers. It helps customers get service and support nearby.
The franchise dealer model is a traditional system where car manufacturers sell their vehicles through independently owned dealerships. This model helps manufacturers maintain a local presence and provides customers with service and support.
fixed operations
"And I do think there are some unique opportunities to unlock additional profitability, especially in fixed operations. For example, as the cars get more sensors on them or able to diagnose when a critical component needs to be serviced or is going to fail."
Fixed operations are the services that car dealerships provide, like repairs and maintenance. This part of the business can make a lot of money for dealerships, especially as cars need more work over time.
Fixed operations refer to the parts and service departments of a dealership that provide maintenance and repair services. This area of the business can be a significant source of profit for dealerships, especially as vehicles become more complex and require more specialized service.
sensors
"For example, as the cars get more sensors on them or able to diagnose when a critical component needs to be serviced or is going to fail."
Sensors are small devices in cars that check how different parts are working. They help the car know when something needs to be fixed or checked, making it easier to keep the car running well.
Sensors in vehicles are devices that monitor various systems and components, providing data that can help diagnose issues or improve performance. As cars become more advanced, the number of sensors has increased, allowing for better diagnostics and maintenance recommendations.
service bay
"And on the dash, the car recommends going to a service bay to get that work done. They're not going to recommend independent repair shops."
A service bay is a special area in a car dealership or repair shop where cars are fixed or checked. It's where mechanics work on cars to keep them in good shape.
A service bay is a designated area in a dealership or repair shop where vehicles are serviced or repaired. This area is equipped with tools and equipment necessary for maintenance work, allowing technicians to efficiently perform repairs.
Hyundai
"...I'm thinking about when dealers were approached with Hyundai and Kia, the ones that got in early."
Hyundai is a car company from South Korea that makes many types of cars, including sedans and SUVs. They are known for being affordable and reliable.
Hyundai is a South Korean automotive manufacturer known for producing a wide range of vehicles, from compact cars to SUVs. The brand has gained popularity for its value, warranty offerings, and advancements in technology.
Kia
"...I'm thinking about when dealers were approached with Hyundai and Kia, the ones that got in early."
Kia is another car company from South Korea, similar to Hyundai. They make a variety of cars and are known for their good designs and prices.
Kia is a South Korean automobile manufacturer that is a subsidiary of Hyundai. It offers a diverse lineup of vehicles and is recognized for its stylish designs and value for money.
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