Suppose you are interested in investing in a golf car dealership. Why, because over the past year or so, you have noticed a fair number of golf car-type vehicles moving about your community, parked at convenient stores, and … In addition, strictly from a personal perspective, in opportunistically inspecting some of these vehicles close at hand, you are surprised to see all the automotive attributes that have been integrated into these machines.
Well-document research reveals a positive outlook for the market
Casual browsing on the internet turns up a market analysis of GCT (golf car-type) vehicles from Small Vehicle Resource, LLC. The study contains two key factors that influence your decision to start a dealership:
• Outlook for the industry is quite positive over the long run, as GCT vehicles become a viable alternative to conventional automobiles for short distance driving;
• Industry structure is rapidly changing, with many new OEM entrants, and thus becoming much more competitive.
The first consideration inspires confidence the business has a good chance to grow. The second suggests that there will be a wide selection of OEMs anxious to be your primary product supplier. These are two major plusses regarding a dealership decision, but an additional critical factor in making the decision is an assessment of the local market. A detailed analysis of the market is covered in can be ordered from Small Vehicle Resource by contacting the author of this article. (See the insert for further details.)
Assessing the local market
Local market assessment is likely to be critical in determining profitability and sustainability of the prospective dealership:
• Competitor assessment—How many dealers are there within, say, a 75 mile radius of what you consider to be the center of your market? For which brands are they authorized?
• Demographics of the market territory—Age distribution can be an important factor. Golf car use is likely to be more apparent in communities of older folks. This is certainly true of 55+ communities and communities where there are a large number of retirees, although not necessarily age-restricted. All age, relatively self-contained communities—self-contained meaning inclusive schools, grocery stores, entertainment venues, etc.—provide a rich prospect for business growth, and may be underserved at the moment.
• Current predominant use of golf cars—Where are golf car-type vehicles being used for the most part? Golf courses? short distance driving? recreation? A combination uses?
The roots of the evolutionary changes in the GCT vehicle industry include work-from-m-home, remotely controlled manufacturing (more localized office locations and work-from-home), the revolution in distribution systems, which allow overnight, home-delivery of essentials for work and sustenance, and rise of the neighborhood cohort of families sharing experiences and lifestyles.
The rise of neighborhood, localized communities is clearly evident from studies of population movement in the United States coming from staff research at the Federal Reserve Banking system, particularly from the Cleveland Federal Reserve Bank. Exodus from densely populated urban centers is quite pronounced. The outflow preceded the COVID outbreak, but the pandemic precipitated an even wider, more rapid population movement.
Cities, which demographers and economists suggest, arose as centers of trade and evolved in modern times into commercial centers for all manner of commercial activities and supporting businesses. They became hubs for employment, growth of technology, and systems of commutation. Now, it appears that cities are losing their raison d’etre.
Metropolitan transportation crisis: Implications and possible opportunities
Included in the locational/demographic analysis cited above should be a broader review of systemic changes in transit systems, which serve the area. These changes are now, and very likely to be on-going in future periods, a key opportunity to develop for a much broader and sustainable market for a new dealership.
A recent article in Smart Cities Dive focuses on the financial decline of major mass transit systems across the country. Clearly, this decline is part and parcel of changes noted above that pose problems for major metropolitan areas.
To understand just how critical the issues are, the following are excerpts from the Smart Cities Dive article.
From Smart Cities Dive:
• Two major credit ratings firms recently restated their negative views on mass transit agencies, citing ongoing subpar ridership and the looming end of federal rescue funds for some operators. S&P Global Ratings and Moody’s Investors Service previously downgraded their view of the public transit sector to negative.
• Moody’s Investors Service stat[ed] that transit systems “will need to secure long-term funding sources or cut services and make other operational adjustments — or some combination thereof — to stabilize finances.”
• S&P Global Ratings noted in a Sept. 28 ratings outlook that transit systems traditionally reliant on farebox revenues will “struggle to balance operating funds” while those supported by significant tax revenues, such as a dedicated sales tax, have been given more positive ratings.
The article further notes that, “Transit ridership in the U.S. plummeted with the onset of the COVID-19 pandemic in early 2020 and remain at less than 80% of the pre-pandemic norm nationally, according to the most recent data published by the American Public Transportation Association.”
Despite supplemental funding by the federal government, a May 2023 APTA survey revealed that more than more than half of the 122 responding agencies said that their operating expenses exceeded revenues currently and would exceed funding from other sources in the next five years. Among large agencies — those with operating budgets over $200 million — the APTA survey indicated that more than two-thirds anticipate hitting a fiscal cliff by 2026.
Among the major transit agencies experiencing major financial problems are:
• The San Francisco Bay Area Rapid Transit (BART) District;
• The Chicago Transit Authority;
• The Massachusetts Bay Transportation Authority
The New York Metropolitan Transportation Authority got an upgrade, but only because returns to revenue bonds were guaranteed by dedicated state tax revenues and anticipated increased ridership.
S&P Global Ratings said recently in September that, “However, for most other transit agencies, identifying a sustainable tax and revenue model to meet operating and long-term capital needs remains an ongoing topic of debate, setting up key decisions in the coming months that will pit service levels against available resources for 2024 and beyond,”
Mass transit problems equal GCT vehicle opportunities?
SVR contends (and predicts) that the combination of technologies which enable work-from-home resulting in declining ridership for most transit agencies, will inevitably undermine and finally do away with metropolitan transit systems as they exist today. Taxpayer indulgence which sustains these systems will eventually evaporate.
Rather than suburbs being appendages to cities and metropolitan areas, current trends foretell the opposite: The (former) densely-populated environments called cities will become “suburbs” in their own right. Plans to convert empty office buildings into residential apartments are a precursor to this historic transformation.
In the developing vacuum of disappearing traditional transit systems and the transformation of cities, SVR sees significant opportunities for GCT vehicle dealerships:
• Collaboration with government agencies to offer on demand GCT vehicle fleet services for inner city residents, as an alternative to conventional vehicles and subways for meeting all short distance driving needs;
• Offer of similar services to residents of nearby suburbs (long-established and dependent in the past to thriving metropolitan areas.
Distant hope or current reality? Further raises the need for a GCT vehicle dealer association
Many reading these last paragraphs may wonder, is opportunity a current reality or a something that might emerge years away? Given the growing competition in the GCT vehicle market, the continuing upgrades and improving performance attributes of the vehicles themselves, and the on-going outflow from densely-populated urban areas, SVR would contend this is a here-and-now opportunity.
Opening up and fulfilling this potential opportunity, however, demands recognition of the need to collaborate in the process of metro-transformations. Realistically, this adds another burden to an existing and new dealership. What is needed is an agency that can undertake the collaborative function on behalf of dealers and do so on a nationwide basis. SVR encourages you as a dealer or dealer wannabe to check out the Low Speed Vehicle Dealer Association at www.LSVDA.com and sign up.
Contact the Author: Steve Metzger at firstname.lastname@example.org. Or check out our website at www.smallvehicleresource.com, where you will find an extensive database of vehicle models and can make side-by-side comparisons of vehicles based on a full set of specifications.