If you believe the corporate manifestos and marketing pitches of every automotive retail-related startup for the last twenty years, then you’d think America’s car dealerships are staffed by a bunch of puppy-kicking thieves providing zero value as they work overtime to deliver the absolute suckiest buying experience known to mankind.
Don’t believe me; let’s hear what a few “disruptors” have to say about buying from you:
Bait and switch? What year is this? 1977?
Dear Dealer: You Have a Problem
While dealers are going gaga over online F&I and self-desking (as they should be), technology is not your problem – it’s the buying experience.
You see, with technology in the automotive retail space, it is impossible to hold a creative competitive advantage for very long. Dealers shouldn’t be developing any technology on their own, and this is especially true when we look at the online buying options. Companies like AutoFi already have this all figured out and there’s really no risk (and no barriers) for dealerships to adopt these.
In other words, once a technology passes the DISC test (Does It Sell Cars), then everyone hears about it and can adopt it with relatively little investment in dollars or labor. (The online F&I and self-desking tools like AutoFi provides passed the DISC test a long time ago, and are currently moving metal and driving incremental profits for dealers.)
Adopting and even benefitting from these technologies is easy. The hard part for America’s car dealers is how to create a better buying experience whether the prospect is buying 100% offline, 100% online, or (as most people already do) via a combination of the two.
Time to Take Charge of Your Image!
The best way to take the bullets out of Carvana’s gun is to create a buying experience that customers actually enjoy. (We know from a recent Autotrader study that less than one-half of one percent of buyers like the current process.)
If you can fix the experience, then there is no other disadvantage these upstarts can exploit. Traditional dealers already enjoy an advantage over the startup disruptors by virtue of their market longevity and name recognition, their investment in facilities, and their ability to rely on profit from Fixed Operations to offset any losses on the Variable side.
So, all that remains is the experience.
Most of the current disruptors in automotive misunderstand what consumers actually want fixed; so they’re solving for the wrong problem. Consumers overwhelmingly dislike the dealership experience, not necessarily the dealership visit. A car is a very personal item to most consumers; so they want to explore it and touch it and compare it… even when they already have their minds made up.
Bringing them a single car on a flatbed to “test own” might avoid the dealership experience, but it also avoids the dealership visit. In the words of Jurassic Park’s Dr. Alan Grant, “T-Rex doesn't want to be fed. He wants to hunt.”
Any dealer can and will sell cars online!
As eBay has discovered, a majority of consumers say they want to buy completely online, but only a small minority are willing (today) to do so. This means the average dealer should take advantage of the tools that are available and require relatively little investment today, but also work to fix the in-store experience through a shorter, more sensible road-to-the-sale that assumes the Up is here to buy – and they’re here to buy today.
Incorporating tablets, electronic trade appraisals and even self-desking tools (that an average sales person can easily explain) keeps the buyer engaged and provides a level of process transparency that is necessary to creating a great car buying experience. Of course, there’s much more than that to creating a great experience.
So much more, in fact, that we created an entire live, video webcast around it that you may have missed. (Lucky for you, we recorded the event and posted it online: https://www.youtube.com/watch?v=hg06cDBw0A0.)