Most experts in the automotive industry will confirm that, although average dealership profits have increased in the last two decades, retail sales are likely to encounter some stiff challenges over the next few years.
These challenges aren’t insurmountable, though. With strategic digital transformation planning and execution, the car dealership of tomorrow is capable of being very successful indeed.
We believe there are two areas in which opportunities lie for any dealership that’s ready to take on the digital age.
1. Shifting customer expectations and reduced margins from online competition
Consumers today expect to purchase anything online. Similarly, they expect delivery to their door and an aftersales service that’s ever-present and accessible from the palm of their hand.
Whether they’re buying tonight’s dinner or their next car, the end-to-end digital buying journey is no longer viewed as a luxury – or even innovative!
However, while online food ordering is becoming the standard, the idea of buying a car from research to delivery without ever entering a dealership is still rather novel. This might explain why big brands like Ford and smaller startups like Joydrive are investing significantly in bringing the dealership experience online.
For instance, a new pilot by Ford is enabling UK customers to buy their car online and have it delivered straight to their home. It’s fast, accessible and convenient. It would also be fair to argue that it reduces the cost of sale for the manufacturer, thus enabling them to maintain or even increase margins against a backdrop of dealerships who struggle to make a good profit.
Joydrive is one of the aforementioned start-ups that lets car buyers choose their new vehicle online without ever entering the dealership. Having partnered with over sixty dealerships across the United States, Joyride offers the tantalising prospect of buying a car from your smartphone and having it delivered as soon as the next day.
Dealerships who embrace this end-to-end online sales process and combine it with a digital after-sales and service package are far more likely to survive and thrive in a world that’s becoming increasingly mobile- and consumer-first.
2. The sharing economy
It’s the million-dollar question: how will the autonomous vehicle and car-sharing revolutions impact dealerships?
Some experts will say retail sales are likely to drop, while others will point at the opportunities there will be to reinvent the dealer business model and uncover new revenue streams.
The fact remains that traditional car sales are unlikely to become a thing of the past anytime soon. People still love the ownership experience, and for every person that ride-shares, there’s many more who prefer to drive themselves.
However, who says dealerships can’t partake in the sharing economy? By embracing technology that seamlessly enables car sharing, any dealer can transform their business into a car-sharing hub and their existing fleet into a flexible revenue source, while contributing to a greener economy.
A used car fleet sitting in the showroom or parking lot costs the business, every second; why not get them out on the road and tap into this growing marketplace, where demand is ever-increasing?
In this fast-moving digital marketplace, standing still isn’t an option anymore. The two challenges above will undoubtedly have their casualties, but it’ll be the dealerships that embrace change and adopt a genuinely customer-centric digital business model that will thrive.