As we see digital retailing becoming more desirable to consumers, it has never been more important for dealers to ensure that their processes and technologies deliver on the promise for consumers. There is nothing more frustrating to a consumer than attempting to transact online with any company just to encounter obstacles and frustration. It only adds to that frustration when there is no integration between software offering customers information that turns out to either provide erroneous information or forces customers to repeat the same action repeatedly.

Imagine if you went to Amazon to buy something and everything said “Call for Price.” Or what if you see a price and add it to your cart only to find that the price is more expensive at checkout. That would probably cause Amazon to lose business despite their speedy delivery. Amazon’s whole brand promise is that they not only sell everything but will make it convenient. Quick fact: Did you know that the arrow under their logo isn’t a “smile” but rather an arrow pointing from the “A” to the “Z” to say that they sell everything from A to Z?

Why would any company that promises an easy online experience, invest in technology to make that happen then fail to deliver on their brand promise? That seems a little counter-intuitive, doesn’t it? Yet this is exactly what many car dealerships do despite these offerings.

Let’s take trade-ins for example. A customer goes onto a dealer’s website which typically have a “Value My Trade” call-to-action. A customer clicks on it, enters their vehicle information and eventually winds up with a range of values. Let’s say $10,000 - $14,000. Which number does the customer see? Of course, they see $14,000. Worst case, they know a range for their vehicle’s value. They come into the dealership, look at the vehicle, test drive it and are ushered into a salesperson’s desk. The salesperson leaves and comes back with a trade-value of $8,000. How do you think the customer will take that? They’d probably be upset. It was after all the dealership’s own website that gave them the trade-in value range.

Why would any dealership want to start a transaction in an adversarial position? Everything could have been going spectacular in their customer experience to that point. Now, that experience just went from excellent to poor. Will they still buy a car? Maybe. Will they like the dealership or salesperson after they leave? Probably not. Would they recommend the dealership to their friends and family? Doubtful.

How a dealership designs their website and the technologies they choose to offer for customers need to fulfill on their promises. If a widget is being used simply as a lead generation tool and not offering accurate information, then the dealership might as well not have it at all. Customers will absolutely hold the dealership accountable for any misinformation or failed process regardless of whether it was the dealership’s fault or a faulty third-party vendor.

Make sure that the dealership is delivering on its brand promise of a great customer experience and easy access to information that is accurate and transactions and sales will come easier as will brand loyalty, service revenue as well as repeat and referral business. There is nothing less expensive to earn but, at the same time, it’s also the most expensive to lose.

In my last blog, I discussed the many consequences that the COVID-19 virus will bring to the auto industry. That list was not all inclusive and there is a factor that I did not include that will affect sales and inventory: consumers.

What do I mean by that? We all know that consumers in the United States have received Stimulus checks. In addition, with the tax return filing deadline extended and the U.S. government operating at a slower pace, there may still be plenty of people that will receive tax refunds. Typically, many dealers see a surge in car sales as this money from tax refunds hit consumer bank accounts but now, dealers will be seeing consumers who not only have those tax refunds but also stimulus checks and, in some cases, those could be pretty large. A family with 2 adults and 4 children that are under the income qualifications would receive $4,400. There will also be plenty of unemployed consumers who are receiving unemployment whether that was because they were furloughed or because their employment was terminated.

What does that mean for used car inventory? It means three things:

First, cars will be in demand. Typically, in these cases, the majority of these consumers looking to buy may be mid to low credit and searching for a “better” pre-owned vehicle. However, to complete the transaction, they may need to trade in a vehicle.

Second, as dealers and the market slowly level out, used vehicle valuations will be all over the place. Dealers will have a glut of inventory that they are trying to unload while, at the same time, being forced to take in a trade from a consumer to do so. Yet, because used vehicle values are all over the place, dealers will probably want to err on the side of caution while the consumers will want as much as possible for their vehicle.

And finally, because banks and lending institutions factor in many things in determining whether they want to finance a vehicle like COVID related items - credit, income and collateral – they will be tightening their lending criteria which could make it harder for these individuals to buy cars while, at the same time, creating a dilemma for the dealer. The more they give for a used vehicle value on trade, the better the LTV is which can influence lending decisions.

It's important for dealers to be prepared for these potential situations by having more accurate assessments of vehicle value through condition. Is this something that will need a lot of service work in recon prior to being retailable? Is this vehicle one that I would need to wholesale?

With consumers increasingly depending on online information, dealers need to ensure that they are providing the most accurate trade-in values that they are able to in order to win the sale, move a unit and take a trade-in right not only to create a better customer experience but also one that creates a situation that is more amenable to lending institutions in order to get those sales financed.