Dealers switching to a digital-first sales model in the wake of the coronavirus pandemic should consider taking making part exchanges an offline process if they want to get the best results, says iVendi.
Many retailers have been forced into adopting trading models that combine an online journey with reserve-and-collect, but a number of dealers are losing customers with part exchanges.
Most online trade-in technology deals with the part-exchange in isolation, generally providing a very conservative valuation.
James Tew, CEO at iVendi, said: “If you were in a dealership talking to a sales person, this almost certainly wouldn’t be the approach. The part-exchange value would be worked into an overall finance calculation that was designed to get as close as possible to your monthly budget.
“Online, what tends to happen is that a valuation is presented as a single, often disappointing figure, and not as part of a comprehensive deal. There is evidence that the buyer drop-out rate at this point in the online journey is very high.”
In many cases, the best currently-available solution is simply a form that allows the dealer to make a human assessment.
“Some of the solutions available work well for some dealers but there is a very strong argument that taking the part-exchange offline is the most effective answer for many retailers and their customers. While it disrupts the purity of the digital journey, it also removes what is a significant issue in many online motor retail journeys,” Tew added.
Value-added products (VAPs) are also proving to be a hurdle for dealers as there is no real attempt at making a sale, other than displaying the product and price.
Tew said: “In many used car sales, VAPs are the source of much of the profitability, so preserving levels of penetration when sales switch to online is very important.
“This is really a matter of presentation and something that can be much improved through better web site design and integration into the overall sales process.”
A recent survey of more than 1,000 consumers who purchased a car through carwow since the UK's first dealership reopenings confirmed a shift towards digital car retailing.
In total, 54% of recent carwow buyers in the UK surveyed by the web-based marketing platform said they would continue to do the bulk of their car buying online from now on..
The survey also found that 43% of carwow buyers in the UK purchased a new car without ever visiting a showroom and 36% of all UK buyers valued changes made by dealers to accommodate remote buying.