In just the past decade, the landscape of the automotive industry has changed dramatically, and with it, the profile of America’s auto retailer.

Recession, bankruptcy, and tight used-vehicle supply led many dealerships and stores to change the way they do business.

But the question remains, “What will the auto retailer look like in the future — by 2020 to 2025?”

This question and more was posed to a dealer panel at the recent New York Automotive Forum, sponsored by by J.D. Power and Associates and the National Automobile Dealers Association.

On J.D. Power’s Global Automotive Blog, the company posted excerpts from the panel discussion that brings to light a variety of market turns and concerns that dealers will be dealing with in the future.

Apparently, all dealer panel members told moderator Glen Mercer, a dealership consultant, that new-vehicle margin compression is a “major concern.”

They also explained that with the recent formation of the Consumer Financial Protection Bureau,  regulation on the F&I side is a near-term concern.

But the overriding theme of the most recent posted discussion: technology and the Internet.

All dealers on the panel agreed that retailing is changing, largely due to the Internet and technological advancements. 

Mercer posed the following question to the panel: “‘Clicks and bricks.’ At some point in time, is there a ‘buy’ button on the website?”

Judging from responses from the panelists, though dealers can complete a variety of tasks online, a dealership's physical presence still will be required even in the future.

And it seems establishing customer relationships may be one of the main concerns regarding purely Web-based sales at the dealership.

Wesley Lutz, owner of Extreme Chrysler/Dodge/Jeep Inc. in Jackson, Mich., said, “For me, sales are always about relationships. Maybe the technology has caught up with the fact that we could sell a car over the Internet, but I don’t think we’ve learned how to establish that same type of loyalty and relationship with a customer over the Internet. Our repeat referral business is the heart of what we do. That’s because people like coming back.”

Interestingly, Jon Lancaster, retired Toyota/Lexus Dealer from Madison, Wis., explained that trade-in deals might make it hard for dealer to conduct all business online.

“I think a differentiator from other industries is: in many cases there is a trade-in. And that trade-in is certainly going to make it a lot more difficult to click the button and have the car show up because they have something they’ve got to get rid of on their doorstep,” Lancaster explained.

Earl Hesterberg, president and chief executive officer of Group 1 Automotive, agreed, explaining that the paperwork needed to complete some trade-in deals may make it difficult to complete online.

“In the state of Texas, we have 45 documents that need to be completed for at least some transactions with a trade-in … I don’t think that transaction in the near-term lends itself to an Amazon.com experience,” Hesterberg said.

The ‘Generational Gap’

Mercer also touched on the “generational gap” as a topic for discussion. Could younger buyers be ready to shift from the showroom to the website?

First, Hesterberg explained that though young buyers utilize dealership websites at a high rate, actual leads from the website are going down, while telephone call rates are going up.

This could be due in part to soaring smartphone use among the younger generations.

“Young people — most of them seem to have an iPhone — pull up your website and click on 'Push: to call.' In some ways, they are as lazy as we have always been. It is easier for them to talk than it is to keep surfing, particularly on a small device. Our phone volume has gone up, but it’s driven by the hand-held device and there is some interaction with websites and online shopping,” Hesterberg said.

Lutz offered another take, which implies dealers need to be extra careful to monitor their online reputations in the future.

“Going-forward, one thing on the Internet that will most influence a shopper is a site like DealerRater. I think people like to read reviews of customers of a specific business. I think they weigh heavily with those shoppers,” Lutz said.  “I know when I’m shopping for a hotel, I will look at those reviews and it means more to me than to see an advertisement or maybe see a dealer touting his own wares when our customers are saying this is a great place to do business. I think we will see some development in that area.”

J.D. Power will be posting various transcripts from this panel throughout the week. The full transcripts can be found here.
 

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