Digital publishing trend
Digital Publishing Trend

Date

We’ve all heard “necessity is the mother of invention” and with automotive retailing the need was to transact almost completely online during the COVID-19 pandemic.  At the pandemic’s height, consumers still had transportation needs, dealers had vehicles and there were health concerns amide stay at home restrictions.   Technology which had been used to a lesser extent for facilitating online purchase activities became the complete purchase channel for buyers needing a vehicle and dealers complying with mandated business restrictions.  With five months in the rear-view mirror, we have enough data to begin seeing the new world order of vehicle sales.  

Early marketers of the buy online from your home model (i.e. – Carvana, Vroom, etc.) saw immediate bounce in all markets.  Traditional retailers like the mega-groups (i.e. – AutoNation, Penske, Sonic, CarMax, etc.) and individual dealers transitioned their store to their digital storefront and began using “home services” features to facilitate transactions for buyers wanting those offerings as part of the purchase process.  The remaining dealers fell into limbo and may be unable to adapt to the new world order of the digital purchase path.

Much has been written on this subject and the slow move away from dealer sales processes of test drives, used vehicle appraisals, desking deals, F&I upsells and hours of wait time.  Consumers have seen the light and will not retreat from the all-digital experience.  

The rapid advance of digital retailing tools like Autotrader’s Accelerate have supported this and contributed to 43% of COVID-19 buyers did more steps online than in any previous vehicle purchase.  *  Additionally, consumers are now asking for more with research showing 71% of shoppers want to do more purchase steps online with future vehicle purchases.  *

Technology and service providers to consumer facing applications for dealers are also experiencing the shift from online shopping to digitally transacting.  While the number of dealers has remained the same, the volume of consumers moving from shopping to purchase continues to climb using the data and software which provide these retailing platforms.  This is supported by the number of digital retailing activities per dealer escalating driven by the consumer’s need for accurate pricing and payments as part of the shopping process.  

This is reflected in the surge of online shopping, digital retailing (DR) engagement and the start of an online transaction by the consumer.  Results through May, 2020 show the Accelerate digital retailing platform delivered 200 million VDP views through a DR enabled website.  Approximately 10 million of those visits created a transaction online and another 5+ million went further with down payments, monthly payment acceptance leading to 2.5 million deal starts online.  This resulted in 463,000 deals sent to dealers through Accelerate with 400,000 completing the process online.  **

As a summary, consumers who had access to DR tools, chose to pencil, start or send a deal increased from 5% to 13% compared to the same period in 2019, a gain of 8% points or a 160% increase.  ***

The evolution of shopping to purchasing vehicles online will continue with the advancements which we’ve experienced during the last 4 months which continue to evolve at a faster rate.  As we see consumers adopt these tools, there are additional changes which be consumer driven through the retail ecosystem which include:

  • Payment shopping with actual credit score lending rates including research/purchase of finance, insurance and aftermarket products
  • Expanded consumer cross shopping between new, CPO and used vehicles based on price, payment and term length 
  • The price and payment gap will narrow between new vehicles (including incentives) and used vehicle wholesale prices (with appreciation) supporting the cross shopping
  • Consumer options and choices will expand with greater selection and options for purchase or lease

Our industry has been waiting for this tipping point in technology acceptance and use by dealer, lenders, consumers and OEM’s.  The benefits are immense with time savings (efficiency) for consumers and dealer personnel which deliver a more connected retail experience across OEM’s and dealers for consumers.  These tools will continue to keep vehicle sales strong for the industry and change the way consumers and dealers shop and purchase vehicles.

Share this post:

Facebook
Twitter
LinkedIn

More
articles