By on March 30, 2020

Auto dealers and manufacturers around the globe have spent the past several years examining the usefulness of digital car sales, but the practice hasn’t been embraced as warmly in the United States, where state franchise laws often prohibit direct sales from automakers to anybody but a licensed auto dealer. Critics say this allowed retailers to become middlemen that customers are forced to haggle, while advocates explain that the system promotes U.S. jobs and provides a local resource for those needing repairs.

Neither are incorrect, yet dealerships have continued to buck online sales, even after manufacturers attempted to work with them on various pilot programs.

With COVID-19 keeping a large portion of the American population at home, dealers are revisiting online sales as a way to cut their losses. Digital transactions now look to be a necessity if shops hope to survive a prolonged pandemic. While many see this as a temporary measure, once the genie is out of the bottle, he’s difficult to put back inside… and may be far less benevolent than we’d like — even if we’re desperately in need of one of those wishes. 

Preliminary results from numerous surveys show dealers anticipate a hard 2020; many expect to see annual revenues decline by over 25 percent. Losses through the next few months are expected to be truly brutal, with the silver lining being a presumed rebound in the late summer or early fall. But that’s speculative, and does nothing to improve the current situation confronting dealers: local governments decreeing shops cannot remain open, automakers producing fewer (or no) cars, and customers who cannot leave their homes.

According to Automotive News, this encouraged loads of auto dealers to swiftly embrace digital sales. The publication launched a survey of 10 retailers last week, noting that nine came back saying they “were likely to increase their use of digital tools to reach customers wary of visiting showrooms amid the social distancing guidelines designed to limit the spread of the COVID-19 virus.” The majority also said they were eager to try at-home deliveries and/or test drives.

On March 27th, New York Gov. Andrew Cuomo said licensed dealerships would be able to sell online — despite the state being more-or-less on a total lockdown. Two NYC-area shops we spoke with indicated they were already working out plans with mobile app developers to make this possible, while others simply plan on strengthening their own websites to make at-home transactions easier (e.g. chat features, clear inventory listings, vehicle delivery services). Some are even attempting to get repair centers certified by the Centers for Disease Control so they can schedule visiting periods for lone customers — though one admitted this may not last if social distancing measures are further strengthened.

From Automotive News:

In some states where dealerships have been temporarily prohibited from selling cars, it’s still unclear whether online or remote sales are allowed. State dealer associations have pressed for clarification from governors about dealerships’ freedom to sell under certain scenarios, including virtually. And as circumstances change daily, retailers and vendors alike have had to quickly adapt to new guideposts.

Yet the virus’ impact may be accelerating the industry’s evolution to digital transactions, albeit out of necessity. The shift has been underway for years, but dealerships have adopted varying elements at different speeds. Now, dealers who spoke to Automotive News about expanding online efforts over the past several weeks say they’re unlikely to drop them once the crisis wanes and business returns to normal.

“I don’t think that the car business is ever going to go back completely to the way it was,” said [Brian Kramer of Germain Toyota of Naples, Florida], whose dealership sold 6,000 new and used vehicles in 2019. “We’re working on building our whole business model around this.”

The heavy discounting currently taking place to tempt customers through a period of economic uncertainty will eventually dissipate, though other changes stemming from the coronavirus outbreak are likely to persist.  Cox Automotive reports that over 4,000 U.S. dealership have signed up for a collection of services recently introduced by Autotrader — including virtual walk-arounds, video meetings with sales reps, ways to schedule at-home deliveries and dealer analytics.

While the usefulness of those features will probably fade slightly as COVID-19 does the same, they’ll never be totally useless. Dealers have embraced the new tools and have a few months to figure out how to make them work, so it’d be surprising to see them go back to business as usual after the pandemic ends.

[Image: Image: F8 Studio/Shutterstock]

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50 Comments on “Reeling From Global Health Crisis, Dealers Embrace Online Sales...”


  • avatar
    hreardon

    Part of me thinks that the overall discounts won’t be as great as people hope, considering that the supply side of the equation is being constrained at the same time as demand.

  • avatar
    Arthur Dailey

    Stuck at home for the next 2 weeks (or more?) so let me predict the majority of posts for the next little while.

    Electric cars are a terrible idea. ICE rules.
    All European vehicles are just a problem waiting to happen.
    CVTs are a terrible idea.
    Small CUVs/SUVs are a waste. Big body on frame SUVs are wonderful.
    Every vehicle should have AWD.

    Does that cover about 50% of forthcoming comments?

    • 0 avatar
      Lie2me

      Real men drive V8 trucks and sports cars, everything else is for wussies and women

      Any vehicle older then 20 years was either perfection on four wheels or the biggest POS ever built

      If it doesn’t come as a stick I’m not interested

      • 0 avatar
        RHD

        My tenets:

        V8s use too much fuel.
        SUVs suck.
        If it does not have a manual transmission, I’m definitely not interested.
        If I can’t do most of the maintenance and repairs myself, forget it.
        Electric cars should have a small gas engine/generator to keep moving and recharge when there’s no plug around, and/or you’re in the middle of nowhere.
        cprescott is just a new username for an old annoyance.

    • 0 avatar
      cprescott

      What is it to you? Who appointed you the Psychic Friends Network representative of the forum?

      I operate thusly – I state my opinion and should I choose to engage someone else’s, I point out the flaws. I don’t make blanket assumptions about commenters (though Honduh, Toyoduh, Tesla, and Apple owners do think as a herd).

      Just to make your day…

      1. Electric cars work wonderfully for those who can actually charge them up; I live in an apartment and that excludes me. ICE does rule.
      2. Europen cars used to be wonderful. There is no reason to waste one’s money on one unless you have a motive other than to buy a practical, inexpensive, and reliable product.
      3. CUVT’s are terrible. It is a law of reality.
      4. All CUV’s and SUV’s are terrible.
      5. I don’t care what wheels drive the thing; just give me a manual transmission.

    • 0 avatar
      pragmatic

      You forgot:

      Gasoline is so cheap I’m paying under $1.50 a gallon the world is great.

    • 0 avatar

      Arthur, you got it man. This site become like a Groundhog Day, very predictable. I already know what every personage is up to. I would add few more though:

      1. I will never buy GM again, it suck and makes garbage.
      2, I will never buy Ford again. Ford sucks and is going bankrupt soon.
      3. FCA sucks and is bankrupt already.
      4. Nissan is for losers.
      55. Kia is a winner and makes the most reliable cars in the world if you do not count Toyota, Honda, Mazda, Ford, GM, VW, Audi, Mercedes, Cadillac, Buick, Volvo and etc.
      6. End of world is coming.

  • avatar
    cprescott

    Oh, right. I’m going to buy a vehicle sight unseen from a lot lizard. Just because Tesla fools are idiots and routinely buy their luxury golf carts without ever testing them EVER prior to buying, that does not mean that THINKING Americans should do the same.

    Buyer beware – digital transactions do not make dealers more honest.

    • 0 avatar
      dwford

      But but but dealers are unnecessary in the car buying process. Just ask Carvana and Vroom. Clickity clack and a car magically appears. What could go wrong?

      I jest. The idea that someone would make such a major purchase sight unseen, test drive unseen boggles my mind. Heck people who spend hours and days physically shopping for cars still make the wrong choice a high percentage of the time.

    • 0 avatar
      jalop1991

      Do you insist on running a specific dishwasher before you hand the money over to buy it? No?

      Trust me, you can buy a Prius or Camry blind, without ever test driving it, and you’ll get exactly what you expected.

      • 0 avatar
        Hummer

        “ Do you insist on running a specific dishwasher before you hand the money over to buy it? No?”

        I do insist on hearing reviews from real owners of appliances, and professional reviews are not good enough. Big difference between someone that has been using their product for 2 years and knows the pros and cons vs a company that tests 20 appliances at once and may or may not have received money from a particular manufacturer for their review.

        • 0 avatar
          jalop1991

          But do you insist on running a SPECIFIC dishwasher before you hand the money over to buy it? No?

          This is no different. Accept that by and large, consumer-bought vehicles are appliances. And there is plenty of information available for the buyer. “Sure, I’ll take a Corolla.” Or, “I’ve been trading these in every 2 years for the last 30 years. Of course I’ll take the current model.”

          Forcing this online purchasing model to come into existence is ultimately a good thing, AND will have plenty of takers–the OCD types commenting here notwithstanding.

          • 0 avatar
            Hummer

            A dishwasher is what? $500?

            The most interesting cheap car on the market (to me) is the Miata, which is what $25k?

            That’s a big difference, one of those is about a day of work to pay for, the other is savings or a loan to buy. Most people can afford to make a mistake when buying a dishwasher, the same cannot be said for a car, or a house for that matter.

            Even the most anti car person will have trouble buying something they never drove.

      • 0 avatar
        ajla

        I don’t sit in my dishwasher.
        I don’t own any chairs, sofas or mattresses that I didn’t try out before buying.

        • 0 avatar
          jalop1991

          The guy who buys Corollas or Camrys will go online and buy a Corolla or a Camry.

          Just like a dishwasher.

          • 0 avatar
            ajla

            I’m not an expert on Camry and Corolla buyers like you apparently are so I’ll take your word on it.

            I welcome an online sales model, but I still think OEMs would do well stetting up showrooms in shopping malls (or where ever) for people to check them out.

    • 0 avatar
      Lou_BC

      We are talking about buying on line. You can take a test drive anywhere or at any time. I’ve read that the best thing to do is go out and rent the vehicle you want to own. The odds are it has some miles on it and has seen some wear. (Disclaimer – if buying used, gotta drive it)

      What sold me on the Sienna we bought was not test driving it but driving the dealer’s shuttle van. The thing had a lot of miles on it and zero squeaks or rattles.

  • avatar
    cprescott

    Oh, right. I’m going to buy a vehicle sight unseen from a lot lizard. Just because Tesla fools are idiots and routinely buy their luxury golf carts without ever testing them EVER prior to buying, that does not mean that THINKING Americans should do the same.

    Buyer beware – digital transactions do not make dealers more honest.

  • avatar
    Hummer

    Instead of having a picture of a guy mentally jerking off to the brand logo on the set of keys like the badge wh0re he is, why not a guy sitting in his underwear on a couch with a hospital table in front of him with a laptop, Cheetos, and BudLight?

    Neither is an appealing image, both are perfectly representative of their respective situations. This being the latter.

    • 0 avatar
      Arthur Dailey

      Over the past 47 years I have purchased, leased or taken over the lease for close to 100 vehicles. And in a significant number of instances I did not take them out for a test drive.

      What dealership would allow a 20 year old to test drive a brand new manual Corvette?

      And after leasing multiple Caravans or Montanas, why would I want to test drive another one?

      When purchasing a manual Sonata, there was not one available in a 250km area. So how would I have test driven it?

      The only 2 times that a test drive would have made a difference were a rental Optima where the angle of the headrest was such that it gave me a headache and I had to return it within about 15 minutes, and a 1st generation Explorer, whose driver side seating area was so narrow that I could not put on/take off the seatbelt with a winter coat on unless I opened the door.

      • 0 avatar
        Hummer

        Typically the vehicles I purchase aren’t found in rental lots, I get enough rentals to know where the term “rental fodder” comes from. I don’t really have much other choice than to test drive vehicles.

        In the case of used vehicles, you would be crazy not to test drive them.

      • 0 avatar
        jack4x

        @Arthur,

        If you are serious and can convince them you’re there to buy, dealers will allow test drives. I won’t buy a car I don’t test drive first.

        I test drove a Pontiac G8 at 23 years old and bought it.

        I test drove a Shelby GT500 at 27 years old and bought it.

        I test drove a Viper at 30 years old and bought it.

        Ironically, the only vehicle I’ve ever been turned down from test driving was a Raptor (that I wasn’t going to buy that day but might have in the future).

        • 0 avatar
          Arthur Dailey

          @jack4x: I bought the Corvette. I had a 75% of the MSRP as a downpayment ready to go. Still the dealerships that I went to would not let me test drive one

          The first time I drove one is when I went to pick mine up.

  • avatar
    2drsedanman

    Can we invoke social distancing and keep the annoying salesman from coming along on the test drive?

    • 0 avatar
      Hummer

      I don’t recall ever having a salesman come on a test drive with me. Even at 23 years old test driving my then brand new H2 Hummer, he took a photocopy of my drivers license and handed me the keys.

      Is that really a thing?

      • 0 avatar
        SCE to AUX

        Seriously? I’ve had the salesman with me on almost every test drive I’ve done, except for some used cars.

        Early on, they’d even drive the vehicle off the lot and then pull off to let me take over. Something about insurance liability…

        • 0 avatar
          Hummer

          Nope, the most I’ve ever had a dealer in the car with me was when I bought my SS Sedan and they drove me in one of the Automatic SSs to a holding lot where the 6 speed was sitting at. I then hopped in and drove about 2-3 miles before going back to the dealer and buying it.

          I had a used car dealer even hand me keys without getting my drivers license info, I don’t think he meant to do that… but I did come back…

          Take notice 90% of my purchases have been GM vehicles, but even the Toyota guy didn’t do a ride along.

        • 0 avatar
          Art Vandelay

          I actually share Hummer’s experience here. Typically I call, talk to someone, show up and get the keys. I’ve also had multiple “take it for the weekend” deals.

      • 0 avatar
        Lie2me

        I’ve never had a salesman with me on a test drive, one even told me to keep the car for the weekend. Once they have your driver’s license and credit score they usually let you loose

        • 0 avatar
          Hummer

          “ one even told me to keep the car for the weekend. ”

          I’ve been told that before on a used car, just didn’t seem right to me – granted it didn’t take me long to realize that vehicle wasn’t right for me either.

  • avatar
    dukeisduke

    I was watching a local newscast the other day, and counted six auto manufacturer commercials in a row.

    • 0 avatar
      Hummer

      Don’t you understand how much they care for you? Do you know how much it costs them to offer 0% financing for 84 months and no first payment for 120 days?

      They have your back, you should be the least bit fortunate.

    • 0 avatar
      SCE to AUX

      Yes, and I’ve yet to see one that explains exactly how you can buy the vehicle, even though they all say “they’re here for me”.

  • avatar
    SCE to AUX

    Of course, Tesla has had this figured out for years. It’s ironic that the dealers now embrace the e-buying model out of desperation. When the dust settles, I can see serious challenges to the franchise laws.

    As for no test drives:

    1. Back when I was a Model 3 reservist, I decided to complete no transaction until I could test drive the car. Fast forward 2 years, I cancelled my reservation. Then, once I did test drive a Model 3, I went and bought a Hyundai instead.

    2. Nowadays, Tesla, Buick (?) and some local dealers have a money-back guarantee on returning a vehicle you don’t want. The take rate has to be very low, but at least it’s possible. I can’t imagine the agony of doing this, including the disruption to your credit rating, etc. It’s not an option I’d want to exercise unless there was a very good reason, like the vehicle build quality was terrible or I (6’6″) just didn’t fit inside.

    • 0 avatar
      Art Vandelay

      That bring it back if you don’t like it isn’t new. Saturn did it back in the early 90s. One of my purchases was an SC2 manual someone decided they wanted the auto instead after a week and a 100 or so miles back when I worked at a dealership.

  • avatar
    ToolGuy

    “Dealers Embrace Online Sales” – I need to wipe down my laptop keyboard after reading this (to get rid of the icky factor).

    But more seriously, let me hop onto the interwebs and order a vehicle right away for the commute that I will no longer be making. Kidding – perhaps.

    • 0 avatar
      SCE to AUX

      Umm, yeah. I gazed at the lease in my garage last night, whose miles have dropped by 3/4, and wondered how many people will cut back on vehicles they don’t need.

      • 0 avatar
        ajla

        “whose miles have dropped by 3/4”

        Only 3/4? If I’m calculating correctly my miles driven between March 16 and April 30 will have decreased by 98.7%.

        • 0 avatar
          SCE to AUX

          I’m still visiting the office for a couple hours a week (essential company), which uses just as many miles no matter how long I stay, plus visiting my housebound mother who’s recovering from knee replacement.

          While I’m creeped out by entering other buildings now, it’s nice to get out.

        • 0 avatar
          Lou_BC

          My driving has gone up considerably. I still have to drive to work but since Russia took on the Oh-PECKERs, fuel is cheap and I got nothing else to do.

  • avatar
    Gardiner Westbound

    The world is shifting to online purchasing. Dealers have one
    chance only to sell an Internet prospect a car. If they monkey
    around with him he will select an alternate quotation.

  • avatar
    Gardiner Westbound

    The world is shifting to online purchasing. Dealers have one chance only to sell an Internet prospect a car. If they monkey around with him he will select an alternate quotation.

    • 0 avatar
      SCE to AUX

      Yes, they know their only value-add is service (play along here…). But they cloak this fear behind the sales model.

      Clothing – another item which requires a ‘test drive’ – is doing pretty well selling online.

      • 0 avatar
        Hummer

        Yea I tried the whole clothing thing online, 90% of it went back.

        Anyone that tells me all jeans of the same size fit the exact same is a damned liar.

        Now there is one clothing item I have found that does work online, I buy my underwear at city boxers dot com but I’m able to choose size 32 waist, the inseam I want, and 5 other measurement options so they are custom made to my size.

        Kohl’s? Belks? Peebles? Yea good luck buying standardized sizes without trying them on, too much hassle to send most of it back.

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