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Automotive E-Commerce – How COVID-19 Has Transformed the Landscape for Automotive Retailers

In order to meet the needs of the post COVID-19 consumer, dealerships will have to adapt and move their efforts online in some capacity.

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In order to meet the needs of the post COVID-19 consumer, dealerships will have to adapt and move their efforts online in some capacity.

Automotive dealerships have faced many external threats over the last several years, including ride sharing, the focused development of autonomous vehicles and competition from online retailers like Carvana.  However, no threat has been more profound than COVID-19.  The pandemic has caused automotive retailers to change the way they do business and rapidly move their efforts online.

Although most retailers have seemingly embraced e-commerce, the automotive industry has remained relatively antiquated.  Little has changed in its nearly 121-year history, since the first dealership opened near Cleveland in 1898.  While automotive retailers have comprehensive websites that allow consumers to start the buying process online, they receive little credit for those efforts once they walk into the showroom.  Many have resisted the urge to move online; however, the pandemic is rapidly changing this perspective.  The pandemic has created a new consumer, for better or worse, and the demand for an online vehicle purchasing platform.

The recent demand for a convenient and efficient car-buying experience is the driving force behind the technological shift in the industry, according to Automotive News.  Now with the effects of the pandemic, the shift is more rapidly coming into focus, and not just for the millennials.

There have been many advances to the digital e-commerce platform in just the past few months, driven largely by the six public groups across the nation.  In review of their first quarter earnings, many have reported increased spending to develop and enhance technologies like smartphone applications to appraise trade-ins and automating more of the car buying process.

Group 1, the country’s fourth-largest franchised retailer, has expanded its digital retailing efforts to all of its 116 U.S. stores, up from 47 locations just a few months ago.  “Our goal is to do business when and how our customers want to do business with us,” said Daryl Kenningham, president of U.S. operations. Group 1’s program allows customers to visit a dealership website, select a vehicle, submit an offer, go through the finance-and-insurance process and eventually select whether they want to pick up the car or have it delivered.  The close rate for digital customers is almost double those coming via other means, Kenningham said.

New AutoNation CEO Carl Liebert, who took over the nation’s largest new-vehicle retailer in March 2020, wants to leverage the company’s digital investments to improve customer experience. AutoNation launched its AutoNation Express online vehicle-buying platform in 2014. Liebert, who built a digital platform for USAA members in his previous role as COO of USAA, said increasing AutoNation’s mobile capability is a clear focus for the future.

An impediment to automotive e-commerce has been the level of paperwork and compliance obligations involved in the transaction.  Firms within the industry like Dealer SafeGuard Solutions (DSGSS) are providing ways to streamline the car-buying process, while remaining compliant with all legal and regulatory requirements.

The DSGSS process assures that from the time a customer enters the showroom or internet webpage through completion of a sale, each customer’s personal, non-public information is controlled and safely secured in a “digital deal jacket.”  The platform eliminates those unwanted sales process shortcuts and inconsistencies that create concerns about unauthorized access to paper copies of driver’s licenses, credit applications, and other private information by securing all of this sensitive information within the digital deal jacket.

In light of the new advances and events, the landscape of the automotive retail space will forever be changed.  In order to meet the needs of the post COVID-19 consumer, dealerships will have to adapt and move their efforts online in some capacity. Although this presents a new challenge, there are many tools and avenues to take that will help transform the way business is done.

 

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