The Pandemic’s Silver Linings for Auto Dealerships

As the Bob Dylan song goes, “You don’t need a weather man to know which way the wind blows” – and it surely doesn’t take an exhaustive dealership survey to prove that the pandemic kickstarted/re-ignited adoption of digital retailing (DR). It’s something that shows no signs of abating.

eLEND has been surveying dealers on their views on digital retailing for the past five years, including our recent report  "The Pandemic Drove a Great Leap Forward in Digital Retailing.” It confirms the pandemic accelerated adoption of digital path-to-purchase experiences for 80% of auto dealers, with 90% planning to continue, or accelerate, digital retailing.

Thank you, Captain Obvious, you may say. Our industry has been experiencing record earnings and profits, partly as a result of these increased digital efficiencies. But what may not be so obvious are the underlying fundamentals revealed by this survey. I believe it proves DR is not a temporary fix, but a lasting, critical solution.

As a longtime evangelist for starting the sales and finance process together, at the start of the process so dealers deliver a frictionless and transparent buying experience, the changes resulting from the pandemic are encouraging, especially as this level of adoption had, pre-pandemic, felt like an uphill battle.

Pre-COVID, DR was hyped as selling cars online, when, in fact, it really was little more than enhanced lead generation. But with the pandemic-driven urgency for contactless transactions, mass adoption of true transactional DR that might otherwise have taken three to five years took just six months.

Post-COVID, these digitally habituated shoppers won’t want just a price quote before scheduling an appointment. They will want to get to a transactional deal remotely.

Even before COVID, 85% of consumers wanted to initiate parts of the transaction online, expecting it would save them time in the dealership. And this is exactly what happened when dealers accelerated DR during the pandemic: According to our survey, 64% of auto dealers reported reduced transaction times vs. pre-COVID averages. 

Those numbers will most certainly grow as auto dealers increasingly match process change with DR technologies; the dealers we surveyed cited this as the hardest part of transitioning to a digital-first sales process.

The dealer side of the information equation pre-COVID was, to be honest, more interested in getting information than giving information: Dealers wanted lead information to schedule appointments, not to sell the car.

But the pandemic created a natural barrier that, by choice or by force, required dealers to provide enough information to actually sell the car, not the appointment. And our survey shows dealer perceptions of DR have shifted from being just another form of lead generation to true deal generation: The majority (53%) of dealers now say they viewed DR as “deal” versus “lead” generation – i.e., “the start of the deal.”

Another pandemic-driven shift uncovered by our survey is that the preferred relative finish of the digital path to purchase experience now extends much farther down funnel than just the first pencil. A mere 14% of dealers see the DR “relative finish” as the first pencil, with nearly one-third viewing it as getting to a qualified deal structure – including trade, down payment, etc.

Pete MacInnis - eLEND Solutions

Finally, the brightest silver lining is the busting of a big myth (pre-COVID) about DR: that it would negatively impact PVR.  In the eLEND survey, 87% of responding dealers reported the PVR (front and back) of digital retail-initiated transactions was the same or higher compared to pre-COVID averages. 

Pandemic or not, consumers now expect a more convenient, technology-enabled car buying process. That emerging demand is a significant opportunity for auto dealers – creating a new “selling” reality, advancing the digital path-to-purchase experience and positively impacting the bottom line.

Pete MacInnis (pictured above, left) is founder and CEO of eLEND Solutions, an automotive FinTech company specializing in online and in-store digital credit and finance solutions for the retail automotive industry.