How the Growth of Digital Dealerships is Pushing Traditional Auto Dealers to Rethink their Strategies


Digital dealership models have been “Vrooming” ahead and 2020 is poised for an even sharper acceleration into the digital space. Given the current landscape, now, more than ever, brick-and-mortar dealers are going to need to look outside traditional car sales to find innovative ways to reach customers. So, what trends should dealers keep an eye out for in 2020?

Growth of the Subscription Model

Over the past two decades, the average car loan has remained steady at five years, but now  we’re seeing a shift towards longer-term loans. People are remaining in cars longer, which drives down the demand. In other cases, people are having to abandon their loans due to being underwater. That’s where the new subscription model comes into play, which offers customers an alternative option to free themselves from long term lease commitments and drive what they want, when they want.

Not surprisingly, this enticing new subscription model will likely experience rapid growth in the coming months since it provides drivers the freedom and flexibility to use multiple vehicles, while simultaneously giving brick-and-mortar dealers another avenue to rid their lots of inventory. An alternative to owning or leasing a vehicle — subscription platforms like Clutch, Flexdrive and Drive It Away — benefit dealers by prompting repeat customer visits for things like subscription renewals and vehicle servicing.

Every time a customer renews their subscription, they’ll communicate with a dealer. From a dealer’s perspective, the subscription model allows dealerships to continually keep in contact with their customers, building better lifetime relationships over the long run. 

Independent Digital Platformsdigital

I don’t have to tell you that brick-and-mortar dealerships have habitually spent a tremendous amount of money advertising with massive, third-party aggregators like Autotrader and These behemoth businesses have huge overhead due to the operating costs associated with them. As such, they’ve inadvertently created an opening in the market for something smaller and nimbler, like a simple app that creates a digital marketplace where customers can transact where and how they want. Essentially, digital retailing that ebbs and flows with how consumers naturally interact.

You may have already witnessed this new surge of independent digital platforms. One great example is Carvana, a website that features a wide variety of cars and facilitates the entire transaction from start to finish. The website serves up dozens of makes and models with the tagline, “A Better Way to Buy a Car.” Admittedly, it’s an appealing offer for a generation of digital-first millennials who are increasingly tethered to their phones. 

Seamless Insurance Coverage for Carsharing 

Carsharing is projected to hit an all-time high in 2020, rising to a whopping 12 million members by next year. Just as customers oscillate between Netflix, Hulu, and Amazon for their streaming services, drivers may use various platforms like Turo and Getaround, which allows urban customers to use an app for car-sharing as needed (for the day or even just a few hours). Truth be told, someone in LA is going to need a different type of car-share experience than someone in NYC. The bigger question is, how do customers acquire insurance that supports them throughout their mobility journey?

As new opportunities to share vehicles arise, there will be a need for all-encompassing insurance that offers seamless coverage, no matter what car a customer is driving or what carshare company they’re using.

In the future, we’ll see flexible, non-owner umbrella programs geared toward customers that drive other people’s cars. These dynamic, new insurance providers have the capacity to offer affordable rates at half or even a third of normal insurance costs. It seems like a no-brainer.

These are just three of the emerging trends that traditional auto dealers should keep an eye on in 2020. In addition to the surging subscription model, arrival of nimble digital marketplaces, and the onset of tailored insurance policies, there will be increasingly more ways for brick-and-mortar dealerships to evolve alongside their digital counterparts in this coming year.

I would advise conventional dealerships to continue to explore new avenues beyond traditional car sales, remaining open to forward-thinking technology that resonates with this new generation of drivers.

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Austin Ledgerwood is Vice President at Cover Genius, where he is responsible for leading key business goals and objectives with automotive mobility partners. As part of the leadership team, Austin drives client acquisition efforts by designing and executing strategic initiatives for Cover Genius. Prior to his current role, Austin served as the Sr Director of Client Performance for Flexdrive. Leading the Client Performance team, Austin’s focus was to grow and develop partnerships with rideshare platforms and large automotive groups. Before joining the Flexdrive team, Austin was the Retail Advantage Director of Business Development for Cox Automotive, focused on client strategy, which includes client acquisition and client management. Austin has also served as the Director of Finance, Commercial and Major Dealer, where he oversaw the credit and collection management of Cox Automotive's Commercial and Major Dealer portfolio. You can get in touch with Austin on LinkedIn or follow Cover Genius on Twitter.