I’ve talked plenty of times about disrupters entering our industry in an attempt to take sales and market share away from dealers. The Carvanas, Beepis and Vrooms dangle carrots of lower prices and better buying experiences and tempt consumers to try a new way of purchasing their next vehicle. Now, it appears, at least one manufacturer has taken notice.
A recent article in AutoRemarketing reported that GM is set to launch a used car online buying experience for consumers – tagged the “Factory Pre-Owned Collection.” The manufacturer intends to offer as many as 30,000 vehicles for sale -- all of which will have under 37,000 miles and include extended warranties. Consumers will be able to go to the manufacturer’s website, browse inventory, select a vehicle and have it delivered to the GM dealership of their choice. They are also extending a 3 day/150-mile exchange program for cars purchased through this medium. It’s unclear as of now how the dealerships will be compensated for these sales.
It’s obvious that this move is in direct response to consumer demand for an easier car-buying experience. It would seem pretty safe to speculate that manufacturers have been watching the disrupters and have decided to enter the online buying space -- And, perhaps, beat them at their own game. The mere fact that GM has the ability to maintain an inventory of 30,000 vehicles for sale; which it stated are lease, daily rental and company vehicles; begs the question of how their dealerships will replenish used vehicle inventory if GM makes the decision to keep them all.
It’s my guess that it’s only a matter of time before other manufacturers enter this space essentially book ending dealerships. On one side you will have the Carvanas in the online space selling direct to consumers. On the other side you’ll have manufacturers doing the same thing. Unless dealerships make the decision to join this movement towards an online buying experience, they may find themselves quickly becoming delivery centers for their manufacturers.
I am not blaming the manufacturers. I have seen firsthand that many dealers are not interested in delivering an online buying solution for the customer. They are making profits and simply don’t see the threat….yet. We as dealers simply must understand that things have already changed -- and for the better. This is what I am calling the “Customer Automotive Experience Revolution.” Customers now have the same choices and power in the automotive buying process that they have long had in all their other shopping verticals.
The technology is there, ready and waiting for dealers to embrace. There isn’t an entry barrier for dealers into this space – other than their own thought processes. The fact is that they can offer an online car buying experience that consumers demand while still maintaining profits and even increasing back-end profit as well.
But think about it for a minute -- When a customer buys a vehicle from a Carvana, or even the manufacturer, who do you think they credit for the great experience? You guessed it. Carvana or the manufacturer. How can dealerships expect to begin a relationship with a customer and nurture them into a loyal service, and perhaps future repeat customer, if the customer’s perception is that the dealership had absolutely nothing to do with the sale? What does this say about the dealership in a time where we as dealers must build trust with our customers and shed that old 1980 car dogma?
Don’t find yourself stuck between a rock and a hard place -- even if the rock is perhaps just a pebble for the moment. Realize that consumers are demanding an easier car buying transaction and that your dealership has the ability to give them what they want. They certainly have companies willing to give them the experience. And, now at least one manufacturer is willing to as well. If you keep procrastinating, you may find your dealership transformed into a test drive and delivery center.
This change is good! Imagine being a customer, if you had all these choices to shop and buy, which would you take? How about your neighbors? If your dealership offered them an escape from the friction of the showroom along with all the advantages that only a dealer can offer, I think I know the answer!