The dealership of the future? Hint: It’s all online
In these days of rapid change, I am frequently asked by dealer principals: “How do I juggle the new technology with changing consumer patterns? I barely understand Gen Y – much less Gen Z!”
We are in the middle of one of the fastest periods of transition in the retail automotive space.
We have several factors impacting the rate of change.
- Multiple sources of affordable capital
- Large inventories of available new and pre-owned vehicles
- A shift in generational buying power to younger consumers with radically different buying habits
- Rapid advancement in consumer technology and the rise of the Internet of Things
Smack dab in the middle of all this change is your dealer principal asking – “What do I do now?”
I dusted off my crystal ball to answer: “What will the auto dealership look like in 20 years?”
The Dealership of 2037
Within the next 20 years, I expect 90 percent of dealership transactions will take place online. Consumers will control the entire process and with access to a complete dossier of information on vehicles, F&I products and financing. By moving the sales and financing online, transactions will be streamlined – and simpler. This new online platform will also make it easier for dealerships to demonstrate transparency and accountability.
With these changes, dealers will focus more on customer service and providing a personal touch during the ownership lifecycle. In the next few years, dealers will place greater emphasis on generating customer loyalty through servicing, maintenance, and continuous consumer outreach and be less focused on individual sales. The service drive will become the primary profit center. For this reason, I see dealerships moving towards pushing leasing models over sales where consumers agree to two- to three-year commitments, performing all their servicing and maintenance at the dealership.
Whew! Imagine transforming your dealership to a service-based business model over individual sales? Clearly, this is the way of the future, and those dealerships that lead this change will flourish in the next 20 years.
Prepare for Change – One Step at a Time
Clearly, these predictions will not occur overnight, and some may move more quickly than others. The key for a successful transition is to plan your work – and work your plan.
A good place to begin is to conduct a Strength – Weakness – Opportunity – Threat (SWOT) analysis of each area of your dealership.
Look at your current service drive operations. List the areas of strength and weaknesses. What are the opportunities to improve the service drive – based on the above predictions? What hurdles prevent you from achieving those improvements?
Once completed, you have a baseline snapshot of your dealership – and the start of a plan for the future. You can now develop a plan to get you on the path toward 2037.
Consider your digital footprint. While several areas of your dealership are manpower intensive, your digital presence is one area that can be quickly modified. Does your current website simply show inventory, a phone number, and a map? Unfortunately, Generation Y has no time for phone calls and dealership visits. They want all the information up front and online – without exceptions.
A recent J.D. Power study reflected that automotive retail satisfaction is lowest among Generation Y. Conversely, this demographic prefers companies who conduct business primarily online. Generation Y consumers give their business to companies that meet them where they are – online.
Some retail automotive companies are getting a head start. Ford Credit recently announced its investment in an online car-buying platform. In February, F&I and Showroom Magazine featured a dealership that successfully implemented an online F&I platform.
Consumers want information and the dealers who provide what the consumers want tend to be awarded by those same consumers. Update your website and push the envelope to include as much information as possible when it comes to your F&I products and financing options.
Create Lasting Consumer Relationships
In 2037, the customer will be in the driver’s seat. Dealership longevity, location, and family namesake will mean very little. What will matter is customer service – from day one. Think about the businesses you frequent based on exceptional service. The restaurant that knows your preferred table and remembers your kids’ names. Are you creating lasting consumer relationships with every person who walks in the door?
2037 is not too far away. But it’s impossible to successfully move forward if you don’t know where you are today. Dust off your crystal ball, create a baseline for your dealership today, and create a plan for the future. It will be here before you know it.