Manufacturers, dealerships and vendors are all rolling out digital retailing initiatives to sell vehicles online. But some dealers remain skeptical and believe that their customers don’t really want to buy cars online, or aren’t ready for that step yet.

Car shoppers already use the Internet to research brands and models, buy insurance and look for dealers. How many consumers would start the purchase process online, if the option were available?

Let’s look at some research. According to Cox Automotive’s “Future of Digital Retail Study” released earlier this year, 83 percent of consumers want to do one or more steps of the purchase process online, and 85 percent said they would be more likely to buy from a dealership that offers at least one component of digital retailing.

In a separate 2017 survey conducted by Capgemini Consulting, just 42 percent of consumers said they were “likely” or “very likely” to buy a car online in the future. Another 2017 study by Root & Associates/CDK found that 53 percent of consumers said they were “very” or “extremely” likely to conduct the entire car purchase online.

I think one reason why there is so much disparity is because as an industry, there is very little consensus yet on what the online car-buying experience looks like. Everyone talks about the Amazon shopping experience, but we all know that buying a car is not as simple as placing it in a shopping cart and paying with a credit card.

Significant obstacles still exist for car shoppers who do want to buy online, including:

  • Accurate, final price quotes that include all variables such as credit scores, local taxes and fees
  • Precise trade-in valuations
  • Consumer expectations of credit and financing abilities
  • Compliance
  • State laws that require documents to have a wet signature

However, new technology and tools have already eliminated, or are in the process of eliminating, these obstacles. So…assuming that in the next couple years none of these obstacles are an issue, does that mean 50 percent to 80 percent of customers will rush to purchase online?

Not likely. According to the Cox Automotive report, 89 percent of consumers said they would still want to sign final documents at the dealership, and 80 percent said they would never purchase without a test drive.

According to the Capgemini report, 71 percent of car buyers still want to take a test drive and see the car in real life.

At ELEAD1ONE, we project consumer adoption rates will be slow. Within two years, five to ten percent of consumers will complete some of the purchase process online. In three to five years, that will grow to 20 or 30 percent.

So, if you are skeptical about digital retailing, does this mean you are vindicated and that you don’t have to worry about offering an online car-buying solution?

I would argue, no. The vast majority of car shoppers are still unhappy with the car-purchasing process. The three major reasons they cite are time, convenience and pressure from car salespeople.

More than half of car buyers are willing to try a new solution if it will save them time, be more convenient and free them from the high-pressure environment of a dealership. Why not find a solution that works with, and can be integrated into, your current sales process to provide them with this experience?

Six out of ten consumers would still want help from the dealership staff, even if they could purchase online. Specifically, they want help from product and technology experts who can help them through online inventory selection, trade-in valuation and financing processes.

This still takes time, but remember that time is relative. People value their time at home differently than they value their time spent at a dealership. When they are ready, all they have to do is come in for a test drive, make the final decision, sign the papers and pick up the keys. This should reduce their total time in the dealership from two to three hours to half an hour or less.

Giving your customers more control over the purchasing process now will give your dealership the edge as purchasing online becomes more mainstream.

If you’re concerned that digital retailing will take away your control of the sales process or reduce profit margins, don’t be. Choose your solution wisely. Most digital retailing products in development are designed to keep dealerships involved in the purchase process. You can retain complete control over pricing. The only requirement will be designing a new approach to selling that’s more consultative in nature than closing.

Ultimately, this is what customers want and where the industry is going. The change is happening now and will continue over the next decade. The sooner you meet your customers’ expectations, the more benefits you will reap.

Author: Bill Wittenmyer

Bill Wittenmyer serves as a VP of Sales at CDK Global, the leading automotive technology and solutions provider. With over 25 years of experience in automotive retail, he relies on the industry’s most comprehensive technology platform and data-driven strategies to help dealerships enhance customer experiences and grow profits.

Digital Dealer