Two new industry reports offer auto dealers meaty planning observations with advice on how to prevent choking.
While the data is parsed finely, the overall conclusion drawn from Cox Automotive’s Car Buyer Journey 2018 and EY’s (formerly Ernst & Young) Automotive Retail 2030 is that consumers still value and need the physical dealership, but dealers must invest in digital technologies to reach buyers further up funnel.
While digital channels remain the most active way consumers engage in the car-shopping experience, EY data notes that more than 80 percent of dealers will not invest in increasing their digital presence, at least through 2020.
Dealers would do well to digest these reports and initiate the suggestions they offer. For example, one actionable item is to hire and train a new breed of customer-facing staff. Another is to reduce customer time in the F&I process. Sales staff training and equipment to take advantage of ups remains a critical focus for dealers.
Interestingly, Cox Automotive’s study noted the declining number of customers visiting multiple dealerships when shopping for a new vehicle.
“‘Walking in’ remains the most-common initial point of contact with the dealer,” Cox noted. Half of buyers don’t contact a dealership before dropping in, and they now spend four fewer days in the market.
“At the same time, buyers report being less satisfied with the price they paid for their car and less often trust that the dealership gave them the best deal,” Cox noted. What does a dealer do about that?
Cox advises dealers to create a “pressure-free shopping experience, transparent pricing [providing shoppers online and in-store pricing tools] and consider one-price or non-negotiable price model can help build customer satisfaction in this area.”
The dealer is the viable link between the OEM and customer, which EY’s 2030 outlook says is not likely to diminish:
- 58 percent of EY survey respondents say they will choose a traditional dealership over other channels to buy a car, even in 2025. This percentage difference by generation: 66 percent of over-50s and 49 percent of those over 30.
- 70 percent of new-car buyers intend to buy from the dealer they visit first.
Much newsprint and digital ink have flowed in recent years to communicate the digital retail message to dealers — from marketing to end-to-end sales and F&I digital technologies — so it would seem new reports like these on this situation are redundant. Yet perhaps not. Dealers apparently aren’t listening or not buying, EY’s report said.
In the foreward to its report, EY noted, “Online presence is increasingly becoming critical to attracting first-time customers … however, it continues to be a blind spot for traditional dealers as most of them do not intend to increase online presence.”
The Cox report observed that “while we anticipate a future shift in this behavior as dealers begin to adopt digital retailing tools, it will remain crucial for dealers to have effective sourcing and CRM processes in place to help understand initial contacts and walk-in traffic.”
For another perspective, I spoke with Stuart Landsverk, a dealership performance consultant with NorthStar Partners and a managing partner at Arizona Car Sales. “I disagree with the Cox report statement that dealers already assume their digital presence is sufficient,” he said.
“Most dealers I know or interact with feel that we are constantly in a battle for eyeballs/impressions. To that end, dealers are reallocating or adding to digital spend for SEO/SEM to their organic sites with firms that can help them do that,” Landsverk said.
Alex Maritczak, head of EY’s Global Auto Finance practice, offered a similar conclusion. “The consumers’ car shopping and buying experience are evolving from strictly an in-store, face-to-face dealer-based interaction to one that is embracing more non-traditional, digital shopping and sales channels.
“At a minimum, consumers are spending significantly more time educating themselves on vehicle preferences and financing options using digital channels,” he added. “The ‘research and education phase’ still occurs even after the first contact is made from walking into a dealership.
“So, even though EY’s Automotive 2030 study indicates that more than 80 percent of dealers may not plan to expand their online presence by 2020,’ most dealers today recognize the value of an online presence for consumer shopping and education, and most dealers already have a digital footprint they believe is sufficient for this multi-channel consumer experience.”
Yet, could it be the reasons dealers aren’t in the mind to increase digital spend now is they recognize what customer survey data confirm? For example, EY says traditional dealers will continue to be the primary channel for car buyers.
Cox Automotive noted that most buyers (60 percent) visiting multiple dealerships — the average is 2.1 dealerships, according to EY — buy from the last dealer visit. Twenty-three percent purchased from the first dealer visited. Not having the right inventory is why most buyers skipped the first dealership visited, and 16 percent cited a poor sales experience, according to the Cox data.
Dealers who market their brand and products digitally across many connection channels are more likely to have consumer share of mind when the consumer is shopping and deciding on which vehicle to buy and where. When the consumer’s ready to act, you’d better be there — wherever the customer is in his or her purchase journey — or lose the opportunity to win that business.
“Introducing digital would help in both enhancing and understanding the customer experience journey,” EY’s Automotive 2030 report noted. “Online visibility is critical to attracting first-time customers. While a customer presently prefers to purchase a vehicle offline, a large part of the purchase journey is already digital.”
Still, there’s that survey data. With data noting that about 80 percent of dealers interviewed stating they did not plan to expand their online presence by 2020, one may conclude:
- dealers already assume their digital presence is sufficient;
- dealers don’t believe the trend toward digital retailing will influence their customers; or
- dealers may be “hesitating” themselves out of the market