Do not write car dealers off.
It was Mark Twain who famously quipped that reports of his death were greatly exaggerated. Many dealers in the UK must feel the same way.
While online portals such as Cazoo, Cinch and Carzam have grabbed the attention, dealers quietly got on with business during the pandemic and have emerged all the stronger for it. Many accelerated their online retail plans and now provide a seamless customer journey whether buying online or on the forecourt.
Data from Dealerweb shows there is still a huge demand for the traditional car-buying process with record numbers of test drives. While online enquiries are the overwhelming first contact, dealers have adapted to provide a quick response and build a sales journey around the individual’s needs.
Car dealers' customer bond
Dealers offer buyers the choice of how they want to purchase their vehicles and back it up with great service and the infrastructure to resolve any problems. With skilled and experienced aftersales operations they can meet the needs of motorists over the life of the vehicle. For many dealers, their relationship with buyers goes back generations, and it’s a bond that won’t easily be broken.
The evidence is in the numbers. A cursory look at the available stock on Cazoo shows 2,789 vehicles available for sale or Cinch 2,937. Compare this to JCT600 with 3,320 used cars, Inchcape with 5.807 vehicles on its used platform or Arnold Clark with 26,886.
Dealers have shown themselves to be resilient and highly effective retailers and the last 18 months show us that they are well-positioned to continue to thrive in the current market.
The deep understanding of the industry and their local markets is hard to beat when coupled with the adoption of the latest technology to build online retail and a closer relationship with the customer.
The dealerships are also part of their communities, and much of the value they add goes unsung, from keeping families and businesses on the road to raising funds for local charities they are valued by the areas they serve, which builds trust and brand loyalty in a way that throwing money at sports sponsorship will find hard to mirror.
Change the only constant
For those of us who have been around the block a few times, it’s clear the only constant in the motor industry is change. New market entrants come and go. Some retail models work, and others don’t. Car supermarkets were seen as an existential threat when they launched, and dealers adapted and thrived.
Looking forward, it’s clear that flexibility will be key in a dynamic market. Dealers will have to call on their technology partners to continue to innovate to help bake in efficiency across all operations with a greater focus on using data and technology to improve the customer experience.
The use of real-time data will equip dealers to compete with new market entrants. It will be vital to provide a superior experience throughout the purchase process. Giving buyers the choice to complete all or part of the purchase online is key.
Greater personalisation of the buying experience will become the norm. Customers expect retailers to anticipate their needs and provide service that is proactive. It seems hard to give each customer a bespoke experience without ever meeting them but using the available data can create a more meaningful relationship.
And finally, retail remains one of Britain’s favourite pastimes. As restrictions have lifted the high street is bustling and the online share of wallet is falling. Shopping for a new car is still a retail event for the family and dealers can attract customers by ensuring everyone who walks onto the forecourt feels valued.
Dealers provide a greater choice of stock, a wide range of finance options, nationwide delivery and experienced aftersales. It’s hard to see where the competitive advantage sits with new, online-only, market entrants that provide a limited choice of stock.
The future of automotive retail is omnichannel, and dealers are well placed to win the battle for motorists' hearts and minds.
Author: Martin Hill, director of Dealerweb.
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