In the past, weekends were usually a busy time at dealerships. People used their days off to shop, buy, or lease new and used vehicles. Americans love buying cars, and over the past decade, they have pushed the market to record highs, but what impact has Covid had?
Before the pandemic, there were approximately 17 million auto retail sales in the US every year. This means around 46,575 passenger cars, SUVs, and light trucks were sold every day. Then the pandemic came and changed everything; it brought a drastic end to the car sales boom.
Carmakers scrambled to bolster their balance sheets and shut down all North American and European production. Car dealers, on the other hand, struggled to figure out how to safely sell and service vehicles as showrooms closed in most US states. The pandemic has forced dealers to change the way they market and sell cars. Here’s what has changed.
Car Selling Has Moved Online
These days, people use e-commerce to buy everything, so selling cars online is a no-brainer. While most auto companies were already selling cars online, some hadn’t digitized all their processes. For example, people buying cars still had to visit the dealerships in person if they wanted to get financing.
But here’s the thing, younger consumers are used to a one-click-to-buy world. If you’re not making the buying process easy for them, they won’t buy what you’re selling. According to Jim S. from Florida Fine Cars, what’s had a substantial increase in their sales is using an omni-channel approach with a heavy emphasis on digital marketing. This has a particularly positive impact on younger audiences, but also creates touchpoints with Boomers and other generations.
But it’s also hard to blame car dealers for their digital sluggishness. It’s a consequence of how the industry is set up. Big automakers usually sell vehicles to auto dealers on wholesale and often provide floor-plan financing to cover short-term inventory costs. In addition, most dealers operate under state franchise laws because they are part of big national dealer networks. Tesla is one exception because it uses a direct-sales model, where states permit it.
The franchise-dealer model started in the early 20th century, and while automakers have tried to get rid of it, they haven’t succeeded. Most Americans buy and lease cars from a dealership and do it in-person. Also, dealers still think consumers are more likely to buy if they’re physically on-site.
Solo Test Drives Are the In Thing
The pandemic has made us get used to social distancing, and dealerships that practice it are making car buyers feel cared for. In some dealerships, salespeople are staying many feet away from customers, wearing masks, and refusing to shake hands. And when it’s time to go for a test drive, customers get tossed the keys and drive off on their own.
Car buyers still want to take time to examine vehicles before buying them, but they don’t want to deal with pushy salespeople. That’s why many of them are shopping for cars online and only visiting the dealership to pick their cars. According to a Google study, consumers now prefer at-home test drives than visiting a dealership. So, dealerships that want to continue making sales must do all they can to adapt to the new normal.
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