Auto Dealerships On Right Road But Not There Yet, Study Says
Cox Automotive President Sandy Schwartz cites three failed businesses as cautionary examples of not keeping up with the times.
Sandy Schwartz recalls renting videos at Blockbuster, buying books at Borders and getting so electronic stuff at RadioShack.
But those companies went bust by not keeping up with the times, says Schwartz, president of Cox Automotive, an amalgamation of service providers including AutoTrader, Kelley Blue Book and Manheim auctions.
He’s not suggesting the franchised dealership system is doomed to a similar fate, but he says dealership changes are in order to keep up with rising customer expectations.
A new AutoTrader survey indicates only a handful of customers like the current car-buying process. Seventeen of 4,002 people polled said they were fine with it.
The remaining 3,985 had issues.
Even if customers are reasonably happy with a business, it’s no lock-down for eternal success.
“People loved Borders at first,” Schwartz says of the defunct chain bookstore.
“And there was a time when any time I needed something electronic, I could go to RadioShack and get it,” he says of the firm that just went bankrupt.
One of RadioShack’s sins was the failure to realize the importance of e-commerce. Similarly, Blockbuster failed to early on spot the growing popularity of streaming video, Schwartz says at a recent National Automobile Dealers Assn./J.D. Power conference. “Blockbuster once was offered $30 million for Netflix but turned it down thinking they had the market cornered.”
Dealers have come a long way toward making the car-buying experience more pleasant. Gone are the days when customers suffered through hard sells and went through mazes to find out vehicle costs.
But if dealers are on the right road, there’s still a ways to go yet. And they could give it some gas. People polled in the AutoTrader survey say dealers aren’t moving fast enough.
Among changes they call for:
Test drives. Nearly 90% of consumers say they won’t buy a car without taking a test drive first. But they want a product specialist, not a salesperson accompanying them. They also want the ability to test drive multiple vehicles of different brands at the same location. That could present operational challenges to many dealers however.
Deal structuring. The study indicates negotiations aren’t going away anytime soon. But study participants like the idea of online deal building. Fifty-six percent want to start negotiations on their own terms, preferably online.
Financing paperwork. Nearly three-quarters of people want to complete the credit application and financing paperwork online. They say that will cut down time at the dealership filling out paperwork.
Dealers and automakers that create better shopping experiences stand to reap benefits, Schwartz says.
He says 72% of survey participants indicate they would visit a dealership more often if the buying process were improved, 66% claim they would be more likely buy from such a dealership and 53% say they would buy more often.
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