In a rapidly changing industry, with technology driving the product transformation from combustion to eMobility, what does the future hold for automotive retail and for Canadian dealers in particular?

Mark Twain allegedly remarked to a reporter in 1897: “The reports of my death have been greatly exaggerated.” Can automotive dealers make the same claim today? On the surface, the answer may appear to be no.

With increasing frequency, we read about new direct-to-consumer (DTC) business models being introduced by manufacturers around the world: Mercedes-Benz in Sweden, South Africa, India and Australia; Toyota in New Zealand; Honda in Australia; Stellantis in the United Kingdom; Volkswagen in Germany; and Volvo globally for its battery electric vehicles. And we have our own made-in-Canada example with Genesis, which launched in 2016 using a reimagined DTC approach featuring an at-home experience, supported by a national network of distributors.

While there are differences across these examples, they share the common elements of OEM inventory management (no wholesale), standardized “no haggle” pricing including F&I, and the customer’s ability to purchase online without visiting a showroom. The retail partner, agency, or distributor supports the customer with information, test drives, vehicle preparation, and delivery on a commission basis. The retail partners operate their pre-owned and fixed operations businesses as they have always done.    

This description of the rapidly evolving DTC landscape doesn’t even include EV-only companies like Tesla and Polestar, and coming soon to Canada—Rivian, Lucid and Vinfast. There will be more to come as Indian and Chinese OEMs contemplate the nearly 20 million unit North American market. These brands are launching with disruptive vehicle technologies and with an equally disrupting DTC retail model—not a traditional franchised dealer in sight.

As New Jersey GM, Hyundai and Genesis dealer Peter Lanzavecchia recently remarked, “We sometimes get the feeling from some of the legacy OEMs that they wish they could bring their EVs to market as a sub-brand through a different distribution channel.”

So what does all of this mean for Canadian dealers? Are those dark storm clouds forming on the horizon? Do I continue to invest and grow or do I contemplate exiting the business?

Clarify Group’s analysis of the Canadian dealer landscape in 2021 reveals that nearly 1,500 franchise rooftops (43 per cent of the national total) belong to groups of at least five franchises owned by the same dealer.

Consolidation is not a new trend as dealers seek scale efficiencies and risk mitigation across multiple brands and locations. As reported in this publication in July 2020, DesRosiers Automotive Consultants predicted the pandemic would accelerate the pace of consolidation along with the potential for new retail models to emerge, and a more equal balance of power in the OEM-Dealer relationship.

We see no evidence to the contrary. I will argue the future looks bright for auto retail in Canada, if approached the right way.

Yes, the transition to eMobility will put pressure on service and parts and the profitability dealers have historically enjoyed (fewer moving parts equals less maintenance).

Yes, retailers will need to make meaningful investments in digital retailing tools and in EV infrastructure including charging, diagnostic, and special tools.

And it is probable that existing dealer agreements will migrate over time to distributor or agency agreements. This will happen even in those U.S. states that currently prohibit DTC models—the technological, economic, and consumer forces behind the trend are overwhelming. 

So why the optimism? TEFF.

TEFF, the acronym coined by Clarify Group, describes how successful auto retailers deliver value to their customers:


Retailers who provide transparency with accurate “penny perfect” monthly payments and trade-in values up-front during the online research phase deliver tremendous customer value. The same holds true in service with respect to maintenance and repair costs.


Retailers who demonstrate respect for the customer’s time with a streamlined purchase process deliver tremendous value. The same holds in service when it comes to delivering when promised.


Retailers who provide flexibility for customers to engage when and how they prefer—and seamlessly, so that it feels like a single customer journey and not two separate online and in-store experiences—deliver tremendous value. The same is true in service when retailers provide customers with options to maintain mobility while their vehicle is being serviced.


Retailers who embrace the idea that their primary role is to facilitate (make easy) the customer’s acquisition of a vehicle, including support with charging options and mobility apps and services, rather than to “close” the deal, add tremendous value. The same holds in service—how can we make your ownership experience more convenient and stress-free?

In a complicated, post-pandemic world, TEFF-aligned retailers ensure their place in the automotive ecosystem by delivering value customer’s can’t get anywhere else.

The financing, lease or subscription of a new or pre-owned vehicle is a very big deal for most Canadians, particularly because vehicles are more expensive and complex than ever before. The ability for customers to enjoy a truly omni-channel experience—to physically engage with the product and a trusted product advisor before they purchase, even if they transact online—is a significant competitive advantage for brands who embrace the role retailers play in local markets across the country.

Does this business model sound familiar? It’s a key reason Apple sold nearly 440 million iPhone, iPad, Macbook and related products in 2020. Apple provides a seamless in-store and online “best of both worlds” experience. New automotive brands who choose to forego a retail network, or minimize its importance in their brand experience, will ultimately suffer retention pain.

Dealers uncertain about how the EV market will unfold, especially related to residual values, may prefer the DTC approach as a risk mitigation strategy. Avoiding floor plan expenses, especially in an era of rising interest rates, allowing OEMs to take the lead on marketing, and enjoying gross profit certainty with fixed commissions per model are also attractive DTC benefits.

Combined with the evolution to smaller retail footprints in sales and service as the transition to eMobility accelerates towards 2035, means that Canadian auto retailers can re-think and right-size their businesses to capitalize on the opportunities presented by a rapidly changing industry.

Forward leaning and TEFF-aligned retailers will enjoy a bright future.

Innovate to prosper.