Online Vehicle Sales – Are We Ready?
There have been many articles posted on the web that talk about how consumers are “chomping at the bit” to buy their next car online. A recent survey done by Accenture found that a large percentage of consumers said that if they could buy their next vehicle online, they would. While this is very interesting (and will likely be the topic of a future post), the question I want to answer is not whether consumers are ready for online vehicle sales, but instead whether the industry itself is ready to support these transactions.
These days it seems that everywhere you turn there’s a new product or service that offers some level of “Buy Online” for vehicles. Every time I see a new one, I ask myself: is this really an industry game-changer? To be completely honest with you, so far the answer has been unequivocally, “no”. But why is that?
Simply put, I believe that any online vehicle sales solution needs to match the following three criteria in order to have a real impact on the industry:
- The data that is being used to present consumers with payments and pricing (interest rates, residual values, pricing, etc.) must be tied to a business-critical system that can facilitate vehicle sales without manual intervention.
- A real connection must be made between a customer and a dealership: it’s not enough to simply gather a small amount of customer data and then sell that to the dealer as a lead (this is model that has existed since the 90’s).
- Online vehicle sales platforms must understand what it takes to sell and deliver a vehicle to a customer – a dealership.
The reason I think that each of these boxes need to be checked off is that without them, we don’t have a solution that can make a real difference in the industry. Let me provide my reasoning behind each of these criteria:
The data that is being used to present consumers with payments and pricing (interest rates, residual values, pricing, etc.) must be tied to a business-critical system that can facilitate vehicle sales without manual intervention.
To me, this is the single most important piece of the puzzle. Many companies have emerged over the last five years that sell manufacturer data (interest rates, residual values, pricing). Now don’t get me wrong, these services are good if we think about them as secondary to the process of selling a vehicle, however, when we begin to rely on them for accurate data, their usefulness decreases dramatically. I have yet to come across a company that sells this data with any sort of SLA (service level agreement) that guarantees data accuracy. Without accurate data, dealers would be crazy to present these numbers in quotes to their customers. There’s nothing worse than giving a potential buyer inaccurate pricing and payments: re-gaining a customer’s trust once they have been misinformed is nearly impossible, just ask any sales manager or salesperson.
A real connection must be made between a customer and dealership: it’s not enough to simply gather a small amount of consumer data and then sell that to the dealer as a lead (this is model that has existed since the 90’s).
This is another area that I see as a big stumbling block for these types of services. Let me be the first to say, building a company that services the Canadian automotive industry to help dealers sell vehicles is hard work. Many companies have come and gone in this space: they emerge with a new fancy way to get the customer to commit to a price or a payment and then they sell that lead to the dealer. While this may sound great on paper, in reality it’s very hard to execute on. In fact, some manufacturers simply don’t allow their dealers to buy these leads. No real evolution here.
Another piece that often gets overlooked by companies in this space is the fact that buying a vehicle is an emotional event: there’s anticipation, nervousness, excitement and many more feelings that all factor into the experience. To imagine that people will suddenly stop feeling those same emotions when making their vehicle purchase online is sort of crazy in my mind. We need to see online transactions as part of this emotional process and then make sure we’re careful to meet and support the needs of consumers throughout every part of the sale.
Online vehicle sales platforms must understand what it takes to sell and deliver a vehicle to a customer – a dealership.
Anyone who believes that selling vehicles without a dealership is easy has never delivered a new vehicle and doesn’t live in a city with a minor sports team. Why do I say this? First of all, selling and delivering a new vehicle is a lot of work: whether it’s managing the lenders, incentives, registration, or even just the task of teaching customers how to use all the new technology in their vehicle, it is a big job! There’s also the (often overlooked) fact that dealerships are major supporters of their communities through local charities and non-charities like local minor and junior sports teams, events… the list goes on. Dealerships are strong supporters of our communities and as appealing as the thought of having cars fall from the sky to our driveway is, the reality is dealerships are local businesses that employ people and support the places we live.
So, to re-iterate, is the Canadian automotive industry for online vehicle sales? I’d say right now, no. But the good news is this: I believe there’s been a major shift in the mentality of many dealerships that, with the proper tools, will make purchasing a vehicle online in Canada a reality in the not-so-distant future. Who knows, we might even be able to help 🙂
Let me know if you agree or disagree, I’m interested to hear feedback on this topic!