Evolving Techniques for Vehicle Sales
Pandemic-boosted new sales modes challenge old school dealers
GENERATIONAL STYLE DIFFERENCES
William Childress, Executive Director, Virginia Motor Vehicle Dealer Board
The pandemic definitely changed the whole focus of dealerships in general, not only the online dealers, but traditional dealerships as well. The dealership became more of a location for the documentation or a mutual place to meet to conduct the transaction. I get the impression that younger customers—millennials and thereabouts—don’t want to be confrontational or argumentative, or they just don’t feel like just hassling with people, and they’re more inclined to make their purchase decision online and take their chances of buying something sight-unseen and untested, versus going into a place and spending three or four hours kicking tires and looking at batteries.
Dealers also face competition from manufacturers, like Tesla, Rivian and Lucid, that are going straight to the consumer, and Zoom and Carvana which sell used cars straight to the consumer without necessarily having a presence in a state. A lot of people who go to traditional dealerships are thinking about the maintenance of the vehicle, possible recalls and the dealer’s relationship with the manufacturer making them the best equipped to service the vehicle. I don’t think the younger generations are thinking about that necessarily. They’re thinking about right now—just getting the bargain, getting less of a hassle and procuring the vehicle. They might be thinking about vehicle service, but maybe it’s not as important to them at the moment because they anticipate the car being in good operating condition and having no issues.
REACHING THE CONSUMER
Lauren Bailey, Director, Franchising and State Law, National Automobile Dealers Association
The main way we’re seeing change in the way that vehicles are sold is dealers having their inventory online, and consumers, rather than coming to the lot and kicking the tires, are getting a lot of their information about the inventory and vehicles from the website or some other platform. In some states, this would allow you to sit in your living room and complete the entire transaction and have the dealer drop off the car in your driveway and you may never even need to visit a dealership.
To meet the customer wherever the customer is—on their lot or in their living room—that’s really how dealers work because they’re local, independent businesspeople. Anything that drives traffic to the dealership website and to the dealership itself, dealers are fully embracing. And that’s coupled with requirements from our manufacturer partners to have an online presence to aggressively reach as many people as possible with the product.
The NADA has worked with policymakers and regulators to move to an all-digital transaction while maintaining security so there isn’t any widespread fraud connected to the use of e-signatures. We have worked with AAMVA about how to give guidance to the states to implement this because it really is a state-driven experience, where the states will need to amend their laws and their practices to move to “e-titling,” “e-lien release” or anything like that in the future. One of the main headwinds that dealers are seeing right now is the FTC’s proposed motor dealer trade regulation rule. The FTC is seeking to impose some stringent, almost impossible-to-meet requirements on dealers with respect to advertising, the selling process and disclosures. ￼
MOVING TO DIGITAL
Pat Watson, VP Industry Relations, TrueCar
People didn’t want to go out and shop so that they went online to see what they could see [because of the pandemic]. It gave dealers an opportunity to showcase what they had in a different way. Eventually, it turned into a situation where dealers could sell online, even though the infrastructure to do it hadn’t been built in most states. What forms could the dealer get the customer to sign digitally? Which forms had to be wet signatures?
A few years ago, NHTSA said that states could now accept a digital signature on an odometer, but before the state can accept it, the state must take some kind of positive action—either pass legislation or a regulation that says they will accept digital signatures. Some states have accepted this practice and some states haven’t. This is one example of how I’d like AAMVA and the National Association of Motor Vehicle Boards and Commissions to work together to develop an up-to-date survey so that people could look and see here’s what you can do digitally in the sale or purchase of an automobile in each state. Because right now it’s not happening. [A dealer doing a transaction may] say “I think this is right. I hope this is right, because if it’s wrong, I could be in trouble.”
Another change from the dealer standpoint is more mobile services. Many of them will come pick your car up for service and they may leave a car for you. Also, right now, not many dealers have off-site service operations, but I think you’ll see that more and more.
Jeremy Beck, VP Dealer Development, National Independent Auto Dealers Association (NIADA)
If I were to say that the pandemic didn’t do anything positive, it would be a lie. I think that the pandemic, the supply shortage and the inventory crisis have caused a 1-2-3 punch in the automotive industry. It has forced us to come to a reckoning on what consumers have been asking the auto industry to do for a decade. They have been asking us to become more transparent. They have been asking us to be more up-front and for the ability to do more things over the phone or digitally, to get things done in a quicker way. They have been asking us to spend less time at the physical dealership. They’ve been asking us to do all these things for all of these years.
Now I’m going to completely contradict what I just said. The data has told us over the last two-and-a-half years that consumers still want that face-to-face experience. In fact, if you look at the most recent auto consumer surveys, the actual number of consumer visits to a dealership before they make their purchase decision is actually going up, whereas for a decade it was going down. One reason for that is because most of the dealerships don’t have the car that the consumer is looking for. So, they’re going from dealership to dealership to try to find it.
Buyers want to have as much prepared when they do come in as possible. They want to spend as little time as they possibly can in the finance and insurance office and negotiating. They want to touch the vehicle and feel its vibrations as they’re driving down the road, then they want to take delivery. They want the exciting portions in person. They want the difficult portions digitally.
I think independent dealers are not afraid to try new things. And generally, it costs them less to try new things than it does a franchise store. Franchise stores are far more process-oriented, and in a lot of cases, that makes them operate better; it gives them more credibility with the market. But they can’t pivot as quickly. Whereas, if something happens in the market, an independent dealer can pivot pretty quickly.