Top Trends That Will Make or Break Your Dealership

Aug 14, 2017 | | |

Top Trends That Will Make or Break Your Dealership

By Kelsey Kruzel, Michael Eggerling

When I was younger, I loved to watch movies about the future. Writers would imagine futures where you could talk to someone face-to-face when they were miles away, where cars drove themselves and where with a few clicks, food was delivered to your door. It’s been fascinating to see the realization of so many technologies that once seemed to be science fiction. The auto industry has had quite a few advances of its own, and as a result, dealerships have had to shift their business model and processes to keep up with the ever-changing world.

As the world innovates, there are always those who accept the change early on and those who wait until it’s proven to be reliable. Rogers theorizes that these groups of people are split into the categories of Innovators, Early Adopters, Early Majority, Late Majority and Laggards. In many ways the automotive industry tends to fall in the latter half of the curve, but understanding the trends that are impacting the industry is the first step to shifting towards the first half of the curve, ensuring the survival of a long-held industry. Here are the trends that will have a major impact in the next few years:

How People Buy Cars

If you’ve read any of our blogs, you’ll know how many times we’ve talked about the shift consumers are making in how they buy a car. They’re going digital, demanding a higher quality retail experience and pushing the industry to change to meet their needs. AutoTrader recently did a study and found that only 17 out of 4002 surveyed shoppers were happy with the current process for buying a car. Furthermore, 72 percent said they would go to dealers more often if the process was easier. While many dealerships are making process changes to embrace their consumers — from streamlining the F&I process to providing more transparency in the Service department— not as many have begun to think about major changes to how cars are bought, including incorporating buying online. Speaking of …

E-commerce

Some might still laugh at the idea of e-commerce and car buying being closely linked, but they’re probably the same people who laughed at the idea of a car driving itself. Consumers have come to expect easy, customer-first retail experiences, and they also expect them to be online or at least supported online. Shoppers also want their products at a moment’s notice — if the emergence of Amazon Prime and Amazon two-hour delivery is any indication. While much of the rest of the world has fully jumped on the e-commerce train, the auto industry is lagging behind. The complexity of purchasing a car does not easily lend itself to simple systems and technologies and much of dealers’ profitability is wrapped up in that complexity. But as more consumers demand it (in fact, 68 percent of in-market shoppers already expect dealers to have Buy Online features) and the technologies become available (like CDK Connected Store), dealerships are starting to make the shift

Vehicle Ownership

As technology begins to make the world more accessible, consumers begin to see even more choices and flexibility in how they buy. This has significantly impacted the trend of ownership in general, including vehicles. More and more people are choosing to rent rather than owning houses, start-ups function in co-working spaces over buying office buildings and more consumers choose to lease vehicles instead of buying them. In the first half of 2016, lease volume hit an all-time high, driven mostly by millennials and seniors.

The “Shareconomy”

This freedom of choice is beginning to show itself in a new emerging trend -- collaborative consumption, better known as the “shareconomy.” Companies like Uber and Lyft have proven that they are here to stay, and as a result, even the late majority are now on board … literally. After overcoming many hurdles, this model has proven to have broad appeal, and these companies are starting to explore further ways to build an economy around sharing instead of ownership, including investigating ideas like fractional ownership or car sharing.

New Competition


In November, 2016, Amazon announced that they were going to start selling Fiat cars online in Italy. In June, they announced that they were going to sell cars in the UK. And Amazon is just the 800-pound gorilla that everyone talks about. In reality, there are numerous new entrants clawing to get into the automotive industry and present alternative retail models to consumers. Why wouldn’t they? The money, consumer dissatisfaction and opportunity is there. And, as we’ve heard time and again, the retailing process is long, cumbersome, ambiguous and not customer-centric.

That trifecta is reminiscent of a few other markets that have played out in devastating fashion over the last 10 years. Ask Blockbuster, Barnes and Noble or Yellow Cab about new web-based competition.

Still, no one is in a better position than auto dealers to enable online retailing that is beneficial for both shoppers and dealers. After all, selling a car will always be fairly complex in the back end. We can’t sell cars the way Amazon sells paper towels and expect to stay profitable. As front end gross profits on new vehicles shrinks and automotive retailers make more from service, parts, accessories, F&I, leasing, manufacturers, etc., the proposition for new entrants gets more complicated. But, that won’t stop them.

Dealers need to defend their stakes now by focusing on their online to in-store retailing process and adjusting their business to better fit the changing needs of their customers. They need to ask themselves, “Am I using processes or consumer-friendly applications and tools to support my in-store process to make things easier for my customers?” If so, great. Now take those processes and make them gospel in your dealership. Tell your shoppers about them and build your competitive advantage around your shopper-first retailing. If not, it’s time to take a look in the mirror and ask yourself if you are ok with an iPhone app taking your business.

KELSEY KRUZEL
Social Media Manager
Kelsey Kruzel is CDK Global’s Social Media Manager. From writing posts to creating graphics, she maintains that nothing should be allowed to exist without a strategy. As the resident millennial in the marketing department, she enjoys having her coworkers explain references that are lost on her and telling people that yes, social media is a job.
MICHAEL EGGERLING
Product Marketer
Michael Eggerling is a Product Marketer at CDK Global, leading marketing for Connected Store, e-commerce tools for auto dealers. With Connected Store, shoppers can browse by lease or finance payments on your web site, build a complete and accurate quote online, send it to the dealership, and then pick up the nearly-complete buying process in store, saving time and building conviction in that vehicle and that dealer. Michael has worked in Technology and Automotive Marketing for the last 10 years. He holds a Bachelor’s of Science in Marketing from Western Washington University and a MBA from Seattle University. He can be reached at michael.eggerling@cdk.com

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