The internet has forever changed the automotive industry, with digital retailing now transforming dealership strategies across the nation. But many dealers are still hesitant to fully embrace the innovation required to ensure future success in this rapidly evolving retail world. Their reluctance could bring dire consequences.
Millennials will make up 40% of the automotive market by 2020 and their consumer behavior is driving this rapid change. It isn’t enough for them to just surf the internet to see what makes and models are at local dealerships before deciding to visit those showrooms. These tech-savvy millennials are taking greater control of the process. They want transparency, convenience and a minimum of negotiation before making a purchase.
Woe to the dealerships who fail to meet their needs. The recent history of business provides powerful evidence that those who refuse to innovate will ultimately fail.
The examples are numerous. Borders was slow to transition to digital and online books. It died in 2011. Blockbuster Video passed up early opportunities to enter the e-commerce world. They went bankrupt in 2010. Kodak didn’t appreciate development of digital photography and failed to fully explore its potential until it was too late, filing for bankruptcy in 2012. Toys R Us closed for good in 2017 after making several e-blunders that were not survivable.
Need more examples? Polaroid, Pets.com, Tower Records, Nokia, Xerox, Sears, Mattress Firm, Shopko and dozens more. JCPenney and Macy’s opened 2019 by closing more stores as foot traffic continues to decline and customers shop online.
More and more dealership customers, led by the powerful millennial demographic, are looking to research and buy online. They are turning to social media platforms to share opinions about vehicle performance, dealership quality and pricing information.
They learn about trade-in values, financing options, accessories, incentives, rebates and other product data long before they visit a dealership — if they even do.
The days of a dealership simply having a website to show inventory, generate leads and share contact information are over. Companies are dedicating resources to generate and monitor social media content, customizing their messages to different market segments.
Integrating the online auto shopping experience with the bricks-and-mortar dealership is key to meeting the expanding needs of members of all demographics — Baby Boomers, Generation X, Millennials and Generation Z.
But it may not be enough.
Studies show that customers are making fewer visits to dealers before buying a vehicle — from up to five visits to just one for some brands. Almost 90% of consumers use dealer websites when they first begin their search for their next vehicle. Some 25% of car shoppers say they are not satisfied with their experience at dealerships.
Buyers Still Explore
Many buyers have no idea what vehicle they really want when they start shopping. They’ll turn to websites and online reviews to inform themselves about what’s out there that may meet their needs.
They’ll drill down deeper to identify more practical considerations about features and accessories. Then they’ll focus more intently on the price tag. When they’ve narrowed their shopping list, many will still search online for dealerships near their home where they can visit and test drive the model they’re interested in. There’s still something special about driving the vehicle you’ve selected before making the large financial commitment to buy.
But a growing number of consumers want to buy a car just like they order a meal delivered from a restaurant or a bag of dog food from Amazon. They identify the product they want, they place their order online and it is delivered to their door (or is waiting for pickup at the store).
Going All in On Digital
Many dealerships across the U.S. offer that buying experience today. Gosch Auto Group in Southern California, Haley Automotive Group in Virginia and Taylor Automotive Family in Northwest Ohio are just three of the companies that have incorporated a digital shopping app into their websites.
This app allows digital shoppers to find in-stock units in the dealer’s inventory. Consumers will see their exact monthly payments and cash-down options. Incentives, rebates, fees and taxes are accurately determined and updated in real time to reflect changing market conditions.
It sends credit information to banks and provides consumers with actual loan offers with rates and payments locked in. Trade-ins are evaluated and final values determined. That Amazon-like buying experience continues through checkout. The sale is completed all online and the vehicle is waiting to be picked up.
Digital tools like this meet the transactional needs of the millennial demographic — a digital experience that is transparent, easy-to-understand and efficient.
Their brick-and-mortar dealerships are not going away because most customers still want to physically touch and drive the vehicle. The size of their investment demands that personal experience and they rely on dealerships for advice and service.
But it is clear that the digital retailing revolution is accelerating, disrupting business-as-usual and sending the industry into action. Those dealerships that don’t have sense of urgency to address the needs of the new shopper will fail to keep up.
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