Why Digital Retailing Is More Important Than Ever

by automotiveMastermind

Well before COVID-19 disruptions, dealers have long known that the future of automotive retail will increasingly take place online. Automotive retail trends before the pandemic backed up this assumption, with an increasing share of car shopping happening before consumers ever entered a dealership.

Despite uncertainty over the exact details of how the automotive industry will respond to and recover from the current public health crisis, one certainty is that digital retailing currently is, and will continue to be in the future, more important than ever for auto dealers.

Whether it’s simply a question of unexpectedly accelerating the existing automotive digital retailing transition or driving more dramatic changes in the automotive industry (such as encouraging more customers to skip the dealership visit altogether through OEM delivery programs), the automotive retail marketplace will almost certainly take a dramatic digital shift in the aftermath of the COVID-19 crisis. Dealers need to consider where their own challenges and opportunities lie in the months and years to come.

In this post, we share insights into COVID-19’s impact on automotive retail trends, including:

Auto sales trends post COVID-19 disruption patterns in Asia
The rise of home delivery of new vehicles during and after the pandemic
Choosing the right automotive digital retailing solutions for success

Accelerating the Online Dealership Transition

One early sign that the COVID-19 crisis may have accelerated preexisting digital retail trends is seen in Asian countries that have recently begun to reopen closed sectors of the economy.

In China, shoppers didn’t come back the instant the country’s automotive retail showrooms reopened. In the first week China’s dealers reopened their doors for sales and service, showroom traffic and parts and service department revenues averaged roughly two-thirds of normal levels.

According to J.D. Power, U.S. auto sales markets had already begun to fall by as much as 80% in March, even in states that were allowing car dealerships to remain open. Consumers clearly are not relying solely on government guidelines when making the decision to visit their local auto dealership, and that is likely to continue in the future when states begin making the decision to reopen.

With buyers potentially hesitant to return to in-person car buying experiences, dealers must be ready to identify and engage consumers in a sales process that is largely online-based if they are going to compete in what could be a dramatically tighter sales market for the duration of 2020 and beyond.

Eliminate the Auto Showroom?

Many automakers and dealers have launched or reinvigorated programs for home delivery of new vehicles during the pandemic – and it’s likely that at least some of those programs will continue in the aftermath.

Automakers aren’t alone in this. Home delivery services are exploding in popularity across the country, including products like cars that had largely been retail-only and alcohol.

While many consumers may take every opportunity to leave their homes in the immediate aftermath of lockdown orders being lifted, in the long term it’s likely that at least some will have gotten in the habit of moving every component of a traditional retail transaction (except product delivery) online.

For dealers, this means making your participation in your OEM’s delivery program something you’re planning on doing in the long term, rather than just doing in the interim. when there are social distancing orders in place. It should involve considering how you have it staffed and managed, what metrics you’re watching, how your customer experience culture should inform and interact with those services, how you integrate it into your dealership’s loyalty marketing program and much more.

Forward-looking dealers can also take investments in delivery programs and use them in concert with data-driven loyalty and conquest marketing programs. If your analytics identify consumers who are likely to be in the market for essentially the same vehicle, consider proactively offering them a hassle-free delivery as part of the offer. This may not only work for loyalty customers, but also as a potential conquest option for customers who may have moved into your market or do not have an existing dealer relationship with your brand.

Review and Update Existing Investments for Digital Retail

Dealers have invested in a variety of capabilities to be as effective as possible in their digital retailing efforts – from strategic investments in Business Development Centers and predictive analytics tools, to tactical efforts to keep up with technologies, such as voice search or video trends.

This is a good time to look at what investments you’ve already made and consider whether you’re getting the most out of them. Additionally, this is the right time to look at whether those tools and technologies you put in place a few years ago have kept up with the state of the technological art.

You may not want to incur new IT costs or other investments right now, but the auto sales market is likely about to enter one of its more challenging periods in years. Hamstringing your ability to compete with outmoded automotive digital retailing solutions is a recipe for disaster. Dealers who proactively adapt to changing automotive retail trends will be better equipped to not only survive but thrive during COVID-19 disruptions and beyond.

If you’re taking this opportunity to review your automotive digital retailing capabilities and are interested in what Mastermind’s predictive marketing sales platform has to offer, contact us for a free virtual demonstration.

Explore additional resources related to auto sales during COVID-19.