Reeling From Global Health Crisis, Dealers Embrace Online Sales

Matt Posky
by Matt Posky
reeling from global health crisis dealers embrace online sales

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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  • Gardiner Westbound Gardiner Westbound on Mar 30, 2020

    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.

  • Gardiner Westbound Gardiner Westbound on Mar 30, 2020

    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.

    • See 1 previous
    • Hummer Hummer on Mar 30, 2020

      @SCE to AUX 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.

  • Darren Mertz In 2000, after reading the glowing reviews from c/d in 1998, I decided that was the car for me (yep, it took me 2 years to make up my mind). I found a 1999 with 24k on the clock at a local Volvo dealership. I think the salesman was more impressed with it than I was. It was everything I had hoped for. Comfortable, stylish, roomy, refined, efficient, flexible, ... I can't think of more superlatives right now but there are likely more. I had that car until just last year at this time. A red light runner t-boned me and my partner who was in the passenger seat. The cops estimate the other driver hit us at about 50 mph - on a city street. My partner wasn't visibly injured (when the seat air bag went off it shoved him out of the way of the intruding car) but his hip was rather tweaked. My car, though, was gone. I cried like a baby when they towed it away. I ruminated for months trying to decide how to replace it. Luckily, we had my 1998 SAAB 9000 as a spare car to use. I decided early on that there would be no new car considered. I loathe touch screens. I'm also not a fan of climate control. Months went by. I decided to keep looking for another B5 Passat. As the author wrote, the B5.5 just looked 'over done'. October this past year I found my Cinderella slipper - an early 2001. Same silver color. Same black leather interior. Same 1.8T engine. Same 5 speed manual transmission. I was happier than a pig in sh!t. But a little sad also. I had replaced my baby. But life goes on. I drive it every day to work which takes me over some rather twisty freeway ramps. I love the light snarel as I charge up some steep hills on my way home. So, I'm a dyed-in-the-wool Passat guy.
  • Paul Mezhir As awful as the styling was on these cars, they were beautifully assembled and extremely well finished for the day. The doors closed solidly, the ride was extremely quiet and the absence of squeaks and rattles was commendable. As for styling? Everything's beautiful in it's own way.....except for the VI's proportions were just odd: the passenger compartment and wheelbase seemed to be way too short, especially compared to the VI sedan. Even the short-lived Town Coupe had much better proportions. None of the fox-body Lincolns could compare to the beautiful proportions of the Mark was the epitome of long, low, sleek and elegant. The proportions were just about perfect from every angle.
  • ToolGuy Silhouetting yourself on a ridge like that is an excellent way to get yourself shot ( Skylining)."Don't you know there's a special military operation on?"
  • ToolGuy When Farley says “like the Millennium Falcon” he means "fully updatable" and "constantly improving" -- it's right there in the Car and Driver article (and makes perfect sense).
  • Master Baiter New slogan in the age of Ford EVs:FoundOnRoadDischarged