Since the invention of the Model T by Henry Ford in ------ the traditional brick and mortar dealership has had a monopoly on the auto retail industry with its only competition being other brick and mortar retailer. Whether it is franchise dealerships or small town dealers, automotive retailers have always known where they stood in the industry and what to expect from its competitors. The age of the internet brought an end to this normalcy and will bring and end to the brick and mortar dealers unless they adapt and embrace the internet and the new type of consumer it has spawned.

In the past four to five years there has been an influx of internet based automobile companies entering the automobile retail industry. These companies have traditionally come in the form of

Other strategies have taken the approach of fighting these potential entrants and substitutes. For example, the continued use of NADA and its political influence and pressure to create and/or enforce laws that limit or ban the sale of new cars by non-franchise dealers. NADA also has urged manufacturers not to sell new cars to companies that act as brokers for these internet sites. A recommendation that was not mentioned in the case study was for the automobile industry, through the use of NADA or some central force, to buyout many or even all of their internet based competitors and thereby obtaining a type of monopoly of internet based automobile sales. This will allow the traditional automobile industry to give the consumer the convenience of researching and buying automobiles online while at the same time have more control over the prices the automobiles are sold at.

As stated earlier in the Potential Entrants section of the paper through the use of the internet, consumers have become a more informed shopper with different options for buying automobiles. No longer are they limited to shopping around at traditional dealers in order to find the best bargain, or are they limited to the information that can be found in a few magazines or whatever was told to them by the dealer or salesmen. Knowledge is power and with the internet buyers/consumers have the power and the dealers/suppliers do not. The bargaining power as shifted to the consumer allowing them to have greater influence on what type of car the want, with what features and most importantly how much they will pay for it. The reduction in bargaining power of the dealer has caused a drop in profit obtained from the sell of both new and used cars. This trend of decreasing profit margin will only continue as the number of automobiles being sold online.

Some topics in this essay:
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