COVID-19 has caused many auto dealers to embrace a variety of new processes. From picking up cars for servicing to limiting the number of staff in showrooms, dealers have had to switch gears in how they serve customers. Additionally, auto dealerships were forced to close the showroom to comply with social distancing requirements in many states.
This development resulted in dealers taking up online sales, something for which brands like Carvana and even Tesla have become known. According to a Cox Automotive study, 80 percent of franchised auto retailers had a digital buying option in May. So, auto dealers have made the switch. Nevertheless, is online sales here to stay? Has it been successful?
Here are some insights into the switch to online sales, and best practices for dealerships who choose to keep this arrangement during business reopenings.
Amid layoffs, furloughs, and a growing public health crisis, customers still wanted to purchase vehicles. A J.D. Power report estimated that California and Washington State saw online purchases grow from 10 to 30 percent in the hardest-hit areas. If the coronavirus did not thwart potential car buyers in these areas, the same could have happened in other parts of the country. Data from other states have yet to be released, but if these numbers are an indicator, online sales could have helped the industry stay afloat in many areas.
A Subset of Customers Will Still Purchase Cars Online
The tide is changing, and there are groups of customers who will likely continue to purchase vehicles online. According to Cox Automotive, a recent survey revealed that two out of three shoppers are more likely to buy their cars 100 percent online. The survey also revealed that 62 percent of respondents are more likely to complete steps of the purchase process online due to COVID-19. Therefore, even if auto dealers want to move away from having the entire purchasing process online, digitizing some steps can be a benefit.
Showrooms Still Have Their Place
The coronavirus has revealed the need for online sales, and that there is an audience for it. However, there are still consumers who want to go into the showroom. They want face-to-face interactions with dealership professionals. Cox Automotive revealed that one out of three shoppers is less likely to buy a vehicle 100 percent online. Additional data showed that 57 percent of shoppers prefer to negotiate in person. Sonic Automotive CEO, David Smith, has experienced this with his customers. He found that despite customers using online sales, the “far majority of customers want to visit the dealership to see the car in person.” Many dealerships may follow suit, as, after the crisis, roughly only half of franchised dealers will still allow for online sales, citing a lack of interest.
Best Practices for Dealers Who Want to the Keep Online Sales Process
Even if the audience isn’t as broad as many have thought, online sales are likely here to stay. As a dealer, even if you don’t continue to facilitate the entirety of your purchasing process online, you may decide to use some online processes to make it easier for customers to buy online. Here are a few best practices to think about:
- Understand what customers want – When you understand the advantages that online buying brings to car buyers, you can change your processes to give your customers what they want. For example, maybe your local customers still want to visit the showroom, but they want to conduct some of the F&I process online before they get there. A survey can help you discover this. Making a point to ask customers what they want enables you to personalize the experience, and provide what they are looking for.
- Plan for new operations – If you plan to do this long-term, you need to think about how you can organize any new required processes. For example, how will you conduct long-distance deliveries? How will you pay for home pick-ups for servicing? Do you need to hire more staff? These are aspects of online sales that you need to plan for.
- Mimic the onsite experience – You don’t want to shortchange your online car buyers. You want to ensure they feel as valued as your in-person buyers. You can do this by having an elegant virtual showroom that individuals can browse through, or have a system that allows customers to pre-apply for a car loan. The goal is to make online sales straightforward and seamless.
Again, online sales are here to stay. Your goal is to figure out if these processes will benefit your dealership and your customers. If this is the next step for your team, you will need to determine the procedures you need to put in place to make it worthwhile for everyone involved.
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This has been a JBF Business Media production.