The Pandemic Drove a Great Leap Forward in Digital Retailing Adoption, Part 3: What’s the Auto Dealership New Normal – and is it a Blessing or a Curse?

Change is hard. But sometimes, it’s necessary to learn a new skill, find a new employer, or adapt to altered circumstances. And when it comes to auto dealerships and the COVID-19 pandemic, change has been seismic: those able to stay in business did so by making quick and comprehensive changes to the way they sell and service cars.

But how much really did change – permanently? As it appears that we are moving to more normalized times, it’s an important question to answer: Will social distancing still be a thing once vaccines are broadly distributed and administered? Will consumers continue to prefer remote or touchless transactions? Surely, as normal life returns, dealerships will be able to put away the sanitizer and temperature guns.

Hold on there for a minute. While time will tell how much of today’s rules stay intact permanently, the pandemic forced other changes, pushing forward innovations in car sales that are likely to stick around because they led to an improved, more efficient, and effective way to sell cars.

So, what Is the Auto Dealership ‘New Normal’?

Let’s start with PVR or Profit-per-Vehicle. That definitely seems like a new bit of “normal,” given that the vast majority of dealers surveyed have seen higher or stable PVR for DR-initiated transactions. Over a third also reported that PVR was higher when compared to pre-COVID-19 averages. It looks likely that DR normalcy includes a rethinking of PVR as it relates to DR.

That finding is indicative of how the pandemic has driven dealer adoption – and how that has changed dealer perspectives. Fully 90% said that they will continue (65%), or accelerate (19%), digital retailing at their dealership. And why not? The embrace of a DR-based normal is a pretty clear and resounding “yes” – one based on results during the most difficult of situations. And it’s not just the revelation of PVR that hints at change: 64% of responding dealers said that DR has sped up transaction times (from meet and greet through delivery) vs pre-COVID averages. It has even impacted the number of car-buying steps enabled to happen remotely (outside of the dealership). The survey found that just 14% see the desired digital car buying experience “endpoint” at the first pencil. Nearly a third, view the DR ‘relative finish’ as getting to a qualified deal structure – including trade and down payment. Surprisingly, 22% of dealers said that their desired DR ‘relative finish’ was remote contracting and delivery of the vehicle.

Pandemic: Blessing or Curse?

Considering the positive impact of DR, it’s fair to say that the pandemic brought with it a silver lining. Embracing DR has, in fact, meant significant benefits throughout the store. For example, allowing customers to have more control of the process combined with faster in-store transactions should lead to higher CSI scores, and a more seamless and streamlined online to in-store workflow creates efficiencies that improve sales team throughput and lower overhead; Best of all, car sales are generally more or equally profitable as they were before. So, it’s no surprise that 73% of dealers surveyed said that the pandemic was a blessing as well as a curse.

 

One thing is sure: the pandemic forced dealers to confront a new normal, meet emerging customer preferences, and unrelenting technological innovations to reinvent the legacy car buying process. Left with few options, the vast majority pivoted to a more technology-enabled, customer-centric car buying process.

It’s important to note, however, that the adoption of a digital process – forced or otherwise – creates a cascade of change throughout the dealership. When asked to identify the hardest part of the transition to a digital-first sales process, 56% said process change while 14% blamed the lack of training or a training strategy. Almost 30% said the hardest part of DR adoption was having the right people. With that in mind, it seems clear: the pandemic showed us that DR adoption isn’t about the challenge of technology – but the challenge of change.