Trust me. I'm a car dealer
TV was supposed to kill radio. Radio is flourishing.
eBooks were going to destroy print. More books are printed than ever.
The internet was due to cut out the middlemen. It merely created new types of intermediary.
In much the same way, many commentators believe that eRetailing spells the beginning of the end for dealer networks.
Well, not so fast…
If car dealers evolve, they too will continue to be needed – but only if networks adopt new technologies and a customer-centred mindset.
It’s all happening, but far too slowly. The automotive model has barely changed for a century. Dealers still expect customers to come and be guided by salesmen (it’s still usually men) in the showroom. They want to stock hundreds of cars on the premises. They believe in selling and commissions.
Meanwhile the digitally-empowered customer has chosen and configured their car online. When they enter a showroom, they know what they want and how much to pay. They don’t expect to be sold to – just helped. Most are not really sure why they need to go the dealer at all. Can’t they just have their choice delivered for a test drive – or having bought it?
Both sides are missing the point. The dealer should have a role – as the trusted face of the brand and friend of the customer. Their role is to solve every need during the ownership lifecycle (from handover to insurance, financing to servicing, reselling the car when used to sorting out parts and accessories). This requires a massive shift in culture – from a focus on sales to an obsession with customer care – and away from selling the box, to concentrate on building relationships via aftersales, new mobility services and connectivity. Every automotive manufacturer and their retail network is on this journey, but few really believe in it. A hundred year pattern is hard to break!
Unfortunately, today’s customers won’t tolerate the old model anymore. Buyers find the experience of visiting a dealer boring, confrontational and bureaucratic. When buying, they want useful insights into how to make the most of a car’s features – akin to an Apple Product Genius experience – without any sales pressure. Ironically, this works for the dealer too. As with Apple products, a premium experience justifies a premium fixed price.
Soft selling works for everyone. No haggling. No problem.
As pressure on pricing increases, Brexit fears and (potentially) tariffs will increase the cost of doing automotive business. With 85% of new car sales being imported, the fall in the pound has already increased prices. The temptation is to pass on costs to the customer – just when that customer expects to save money by finding smarter ways to buy. They are amenable to disintermediation – a fancy word for getting rid of dealers – and many OEMs are already experimenting with web-selling and virtual dealerships.
So retailers have to raise their game. Across sales and service, their future depends on one key word. Trust.
Tens of thousands of jobs – and a £60bn annual contribution to the economy – depends on it.