Auto dealers are praising themselves for dramatically accelerating the shift to online retail in response to the COVID-19 pandemic. But despite real progress at many dealerships, consumers still see online car retailing as lacking, according to market research from Capital One Financial Corp.
“Dealers think they’ve taken a big step toward digital, and therefore transparency,” said Sanjiv Yajnik, president of financial services and head of auto finance at McLean, Va.-based Capital One.
According to the bank’s recent annual car buying outlook survey, 77% of car dealerships surveyed describe their online process as “seamless,” up from 54% a year ago.
However, consumer reactions have moved the other way. In the latest survey, 26% of consumers rated online retail as transparent, up from 40% last year. Respondents this year were 2,200 consumers who bought a car in the past six months or said they plan to buy one in the next two years, as well as 530 dealers or dealership managers, Capital One said. .
“Customers say, ‘Wait a minute. They don’t really make this thing transparent. If you think about it from a competitive point of view, it makes a lot of sense. Due to the pandemic, the digital economy has been accelerated, I would say, five to seven years,” Yajnik said in a phone interview.
While car dealerships have made a lot of progress online, they were lagging behind other retail industries in their online approach before the pandemic. And as retail industries ramped up in the pandemic, dealers are finding they are still falling behind, he said.
Many dealerships are truly ahead of the curve in embracing online retail – by auto industry standards.
But historically, most dealerships see online only as a research tool for consumers and a means of generating leads for brick-and-mortar dealerships. The goal was to bring buyers to the showroom, where the real selling could begin. Until the customer is in the eye, the average dealer tends to avoid talking about price.
To be fair, Yajnik said, buying a car is a complex transaction. The price of a new car is usually negotiable, there is often a trade-in to consider, as well as financing, with many variables like the customer’s credit rating, down payment amount, interest rates. interest and loan terms.
The technology exists to manage all of these variables online. There are also many competing apps.
Most consumers still want to visit a dealer at some point before taking delivery. According to the survey, 75% of consumers said they would use a combination of online and in-person shopping, and a surprisingly 40% said they would visit at least three dealerships.
But resellers can’t drag their feet, Yajnik said. “Dealers need to take the leap. Because I believe dealers who don’t take the leap, who feel like they’ve done enough but don’t go far enough, risk becoming obsolete.