5 Min ReadJanuary 29, 2024

Busting the Top Five Myths About the American Car Dealer

Busting the Top Five Myths About the American Car Dealer.

When you live and breathe the industry you work in, you tend to get a little protective of your colleagues and customers from an outside world that simply misunderstands what you do, or even why you exist.

This has definitely been true during my time in automotive retail. It’s an industry that from the outside might seem antiquated but, as we know from the inside, is a vibrant, cutting-edge ecosystem that's moving at light speed.

And as electric vehicles (EVs) and digital sales trend as hot topics, there are some fundamental aspects of the American car dealer that many people may not realize. Read on as we bust five of the biggest myths.

1. Shoppers Are Abandoning the Car Dealership

Car shoppers continue to flock to dealerships, even as the mainstream press, fueled by only a few direct-to-consumer success stories, says otherwise. Despite these few exceptions, the American consumer still prefers the brick-and-mortar dealership experience. The CDK annual Ease of Purchase survey revealed that 70% of customers relied on their local auto retailers to complete the entire car buying journey at the dealership. This preference is strongest among first-time buyers. On average, less than 2% of those surveyed bought a car fully online. In an upcoming study on EV ownership, even half of Tesla buyers said they bought their car entirely at a “dealership.”

2. Consumers Don’t Want to Use Dealership Service

A growing number of owners who seek vehicle repair and maintenance work prefer auto dealership Service departments over other repair facilities. That’s according to a recent CDK survey of over 2,000 service shoppers. It found 43% of consumers prefer dealership Service centers, a two-percentage-point increase from 2022 and nearly 10 percentage points ahead of independent repair facilities.

Dealerships enjoy a reputation for doing quality service work — a reason for their popularity. Nearly half (47%) of service shoppers cited factory-trained technicians as a major reason to visit the dealership Service department, while 38% appreciated that original equipment manufacturer (OEM) parts were on hand.

Dealer Service departments are also cited as preferred because of their existing relationships with customers. The survey indicated 52% of service shoppers go to a dealership because its service personnel know them and their vehicle the best.

Yes, dealerships need to continue to combat the perception that their services are more expensive, and more need to add critical digital features such as online appointment scheduling and repair estimate approvals. But there are many reasons service shoppers go to the dealer more often than other options.

3. Shoppers Don’t Want to Experience the Car in Person

Inventory shortages during the pandemic led many shoppers to order vehicles sight unseen directly from factories. Now that inventory is back, we’re seeing that trend slowly reverse course. The Ease of Purchase survey backs up this assertion. Ordering cars from the factory declined steadily with 28% of shoppers in June 2022, dropping to 18% in recent months, with the average falling near 21%.

The test drive also remains a vital part of the car buying process and is generally the final factor in shoppers making their decision. And this is even more true for EV buyers with recent CDK data showing over 80% of people who bought an EV test-drove one and many stated that’s when they “fell in love” with this new type of powertrain. Non-Tesla owners were swayed by the test drive even more than Tesla owners too.

In addition, nearly 43% of consumers visited two dealerships when shopping for a vehicle with 47% seeking guidance from an expert before deciding on their purchase. Even as technology streamlines the buying process, shoppers still want to see, touch and test-drive a car before signing on the dotted line, and they’re doing it at car dealerships.

4. Car Buying Is A Pain in the A …

Sometimes it seems like every story you hear about a friend or acquaintance’s car purchase is overwhelmingly negative. CDK wanted to find out if the data backed up that seemingly irrefutable truth.

That’s why the Ease of Purchase Scorecard’s main metric is a straightforward question, “Was it easy to buy your car?” And the answer “yes” has hovered over 80% for the 18 months since we started tracking it. That simple question has now been asked to thousands of car buyers and while they may not talk your ear off about an easy purchase, they certainly click that answer when asked.

For some time, while supply was constrained, simply finding the car a shopper wanted was difficult but that, too, has reversed with the most recent Ease of Purchase data from December showing 73% of buyers finding it easy to secure the exact model they had in mind.

The financial aspects of the deal do remain a sore spot, but no one likes to pay their utility bills either. Only 58% of those polled found it easy to agree to a final price and just 53% said it was easy to land on the trade-in value for their former vehicle. Programs around transparent pricing, and especially speeding up the overall shopping process, would help move these numbers higher.

5. EVs Will Be the End of the Dealer

The electric revolution is complex and often confusing, but after years of EV penetration taking hold, the end of the dealer is nowhere in sight. In fact, consumer confusion over federal tax incentives — along with the benefits, costs and performance of EVs — makes dealerships even more important as a source of knowledge for overwhelmed EV shoppers.

In our EV Confusions Carries On study, CDK asked approximately 1,200 new car shoppers who they trust to clear up confusion surrounding EV incentives. Nearly nine out of 10 (89%) wanted the salesperson at the dealership to explain how to claim tax incentives. They also want the dealer to help them decide if an EV is the right purchase for them. Nearly three out of four (73%) of hybrid shoppers and 59% of gas shoppers stating the loan of an EV from a dealership for a day would help them understand the benefits.

Dealers themselves think that EVs will be a help and not a hinderance to their Service department too. Nearly four out of five, 79%, Service leaders believe their overall revenue will increase in the next two years as more EVs come in for repairs and maintenance.

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Barb Edson
By Barb Edson
EVP, Chief Marketing Officer

Barb Edson is executive vice president and chief marketing officer at CDK Global.

Barb and her team focus on delivering successful marketing and commercial strategies that help strengthen connections across the automotive retail ecosystem for CDK, its dealer and manufacturer customers and the consumers they serve. She has more than three decades of business strategy and marketing experience in software and technology.

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