The advent of new mobility services is predicted to disrupt the future of the automotive dealer, who will have to adapt their offerings to meet changing consumer trends.
An automotive dealership traditionally sells new or used cars to consumers at a physical location, and may provide additional services such as finance options and maintenance services. Dealerships are generally franchised to sell cars from a specific motor manufacturer.
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However in the new age of digital, consumers are finding the dealership process a slow and inefficient way to secure a deal on a car. At the 2019 Motor Finance conference, speakers warned that dealerships may become obsolete in the future if they do not enhance their offering.
Georg Bauer, co-founder and chairman of digital car-buying startup FAIR, said: “A recent survey in the US revealed that 84% of Americans do not like going to dealerships, while 70% of millennials now do their shopping on their mobile. Change is necessary and it is being driven by consumers who simply want a new way to shop for cars.”
There will be a growing emphasis on automotive dealers to make the acquisition process faster and easier for the customer. Some industry experts have touted dealerships to place a greater focus on the experiential side of commerce, while the sales process will be moved to the online sphere.
“The car-buying process is not as transparent as it should be,” said Heidi Bauer, founder and chief executive of fromcash2car. “There should be more education at the forefront to help customers in terms of financial services products that are complex and difficult to understand. If we provide customers with the options and explain them effectively then that could really help.”
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As more services and information is being made available to consumers online, dealers will have to do more to keep the footfall flowing. One way to do this is to incorporate some digital features in-store, providing customers with an experience they cannot get online.
Rupert Pontin, director of valuations at Cazana, suggests that the visit to a dealership can often be a daunting prospect for a prospective customer. “A customer facing the daunting experience of visiting a dealership could utilise a voice search function when entering to help guide them towards the cars they are interested in for example – closing the analogue-digital gap.”
A recent survey from Cox Automotive and Grant Thornton found that just 20% of dealers currently have a full online sales transaction option. The report also found that more than 90% of car dealers expect to see some decline in the number of UK dealerships over the next five years, with six in 10 respondents predicting a fall of 10% or more.
Philip Nothard, customer insight and strategy director at Cox Automotive, said: “The role of the dealer is still crucial, but we know that consumers want to interact with the automotive retailer in a variety of ways – notably via a range of digital platforms.
“Our analysis clearly shows it is not just a case of replicating the retail experience via the internet. Those dealers that are leading the retail evolution are embracing technology to improve the customer experience and bring more flexibility into the car buying process.”
