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Today, we’re going to do something a little different.
We’ve written about how technology has brought about a new, empowered automotive shopper. We’ve also written about how the emergence of this modern, tech-enabled car shopper has forced many dealerships to adapt their processes.
These changes to our industry are happening at such a fast rate that it’s enough to make anyone’s head spin. That’s why today we thought it would be helpful to take a brief look at some of the major ways that car shopping has changed.
We hope you’ll walk away with a crystal-clear understanding of how the car industry has changed over the years so you can ensure that your dealership thrives as we move into the future. Below are five of the biggest ways that automotive retail has changed over the past two decades.
1. The Shopping Process Starts Online
Before the internet came onto the scene, consumers kicked off their car shopping with a quick visit to the lot or the showroom floor. In many cases, these shoppers were unaware of the latest and greatest advances in automotive technology. They needed education on the new models, what their advantages were over competing models, and ultimately which car would best fit their lifestyle. For this, they turned to the dealership sales staff, which brings us to our next point.
2. Dealers Have Less Control
In the golden age of car sales, shoppers would come to dealers with a general notion of what kind of car they wanted. It was the dealer’s job to guide them to the car that best fit those ideas. This gave dealership sales staff major control over the shopper’s buying process, as they could form a relationship with the shopper earlier, establish credibility, and ultimately influence the sale. Now, with most of the shopping process happening on the internet, clever dealerships have realized that they need to do this through their online customer experience.
3. Shoppers Are Visiting Fewer Dealerships
According to McKinsey, the average number of dealership visits has fallen to just 1.6 – down from 5 in 2004. Before the internet disrupted the industry, shoppers visited dealerships far more. Oftentimes car shoppers would dedicate an entire day out of their weekend driving around to different dealerships, checking prices, test driving vehicles, and weighing their options.
Today, sales are won and lost online. When car shoppers visit a dealership, typically they’ve done their research and they’re ready to buy.
4. Negotiation is a Bitter Battle
The advent of the internet led to a decrease in dealership control of pricing. In the past, for a shopper to negotiate effectively, they had to spend hours – perhaps even days – driving around and negotiating with different dealerships to get competitive pricing. Now all it takes is 30 minutes and quick search on the internet to get the pricing for every nearby dealership. This has resulted in a “race-to-the-bottom” price war, which ultimately has put a squeeze on margins.
5. Word-of-Mouth Is Amplified. Exponentially.
Word-of-mouth has always been important, but before the age of online reviews and social media, it was certainly less impactful. If a shopper had a bad experience at a dealership, they would tell their immediate family – maybe even a friend or two. But now, shoppers are connected 24/7 to vast social networks of friends, family, and colleagues.
These shoppers are willing to share their experiences too. According to CapGemini, 51% of US car shoppers post or intend to post about their dealership experience. In today’s day and age, everyone’s a broadcaster.
The car industry has changed drastically over the years. With technology advancing as fast as it is, the chances of that slowing down are pretty close to zero. As more and more of the car shopping process moves online, dealerships that take advantages of these changes in trends will be well-positioned for future success. Those that don’t risk sliding into irrelevance.
How has your dealership taken advantage of changes to automotive shopping?