Traditional dealerships are no longer the only option consumers have when it comes to car buying. Disruptive business models from Amazon, Carvana and others are transforming the automotive industry and posing a risk to local dealers.
To compete with the latest innovative business models, it’s critical to turn your employees into your main source of competitive advantage. Since today’s car buyers complete most of their research online, they’ve likely already made a decision before walking into your dealership — and the only thing standing between your customers and their new vehicle is your people.
Following are only a couple of emerging disruptive business models in retail automotive:
Amazon Online Car Sales
Amazon has been experimenting with an expansion into online car sales. The e-commerce giant has a track record of dominating nearly every vertical it expands into since starting out as an online bookseller, so it’s likely to see success with automotive as well.
News broke in June that Amazon is recruiting car sales executives in Europe and may soon start selling vehicles in the U.K. Amazon has already tested online car sales in Italy, with the availability of three Fiat models. Customers have their choice of four preset packages and can pick up the vehicle from a dealership within two weeks of purchase — ultimately eliminating the need for the customer to interact with sales staff at the dealership.
To adapt to the digital retailing shift, some automotive brands, including BMW and Ford, have tested moving some steps of the purchasing path — such as configurations and financing — online. Since today’s car buyers demand a digital-first experience, and complete much of their research before even setting foot in a dealership, it’s critical for all dealerships to have a strong online presence that gets customers excited to buy a car from their brand.
Carvana Car Vending Machines
When Carvana first launched, one of its main objectives was to deliver vehicles directly to consumers. Rather than dreading a sales pitch in a dealership, customers can get excited about the purchase experience of just buying the car directly. Carvana customers have the option to buy cars online and either pick them up from vending machines in select markets or have the vehicles delivered to them directly, meaning car buyers who opt for Carvana avoid the dealership experience completely.
Adapting to the Times
The growth of online retailing doesn’t mean all car buyers will turn to Amazon, Carvana or other options that eliminate dealership interactions all together. A recent study found 70 percent of consumers still prefer to visit car dealerships to test drive cars, see the vehicles in person and learn more about available features. But this shift does mean your dealership needs to offer a top-notch customer experience or risk losing business to competing dealerships or disruptors.