Rethinking Auto Dealerships / Part 3: Moving Forward

January 25, 2021

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As we enter this new year, full of hope and the scars of 2020, we’ve reflected on our pre-pandemic predictions and how they align with today’s realities. In this three-part series, our CEO, Lee Carpenter, and Executive Director of Strategy & Insights, Bill Chidley, share their perspective from 2018 on the unprecedented change the auto industry has seen in the digital age. After looking back, the fact is the customer has been asking for change for a long time. It’s now time to leap forward in a way that isn’t reactionary.

The dealership experience today is disconnected from the digital shopper and is not performing up to its potential. It lags behind best-in-class non-automotive retail and service experiences shoppers have every day – and the gap is widening. Car shopping is increasingly done on mobile devices–using smartphones and tablets– and not just before coming to the dealership. According to a study by Placed, 63% of car shoppers use their smartphones to do research and make decisions while actually at automotive dealerships. And when it comes to F&I, 70% of the customers surveyed by AutoTrader want to begin that process online to shorten the time at the dealership.

Smart Dealerships

Retailers are innovating with seamless shopping experiences that turn online and in-store behaviors into data that lets them design personalized shopping experiences, like shared family shopping lists and hyper-targeted promotions. Brands like Uber and Dominos are making it easier to summon cars and pizzas, track their arrival and delivery times, and pay without effort. Innovations in big data analytics and sophisticated algorithms impact retail sales by analyzing shoppers’ digital behavior, delivering recommendations, targeted content, and offers. Consumer expectations for all experiences continue to rise with every app update.

Despite these facts, dealerships lack digital integration with the path-to-purchase and fail to harness the momentum of the shopper’s online behavior. Creating a digitally savvy, smart-dealership is an opportunity to enhance the experience with better connectivity and content for customers. It will also deliver priceless data to the sales and service teams via digital profiles summoned by the customer’s smartphone, facial recognition, and video analytics. Through the use of sensors and leveraging a WiFi network, augmented reality, connected cars, and Cloud computing, the dealership can tailor the experience at the individual level. This will drive increased sales effectiveness, upgraded experiences for premium customers, and higher overall satisfaction.

The dealership opportunities to capitalize on the car shopper’s digital behavior, and deliver a more integrated, digitally-driven experience is largely untapped. All of these capabilities are within reach using currently available technology, and the ability to innovate a best- in-class, smart-dealership experience poses a significant competitive advantage.

A Path Forward

There is no aspect of consumer experience that has not been transformed by either digital disruption or digital integration, yet shopper behavior and the current dealership experience are misaligned. Manufacturers who help their dealers proactively rethink the consumer experience and respond with dealership innovation will have a first-mover advantage and set a new standard for a superior brand experience. As demonstrated by Tesla, established brands are threatened by new, well-capitalized start-up brands free to build new direct distribution models that avoid dealer franchise laws  and focus on digital from day one. But the established dealer network has an advantage in both customer acquisition, knowledge, and service and needs to be nurtured and innovated to move effectiveness to the next level.

This post wraps our report. Want to look back? Part 1: The Case for Change is available here, and click here for Part 2: A New Model for the Dealer Operations. Or download the full story via the button below.

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