Car dealers adapt to changing times
With consumers going online, dealerships are turning to better service, developing relationships.
As many big-box retailers struggle across the nation, automotive dealers also face a time of uncertainty.
Technological changes, such as autonomous and alternative fuel vehicles, and shifting consumer habits all pose challenges moving forward, said George Sharpe Jr., CFO at The Sharpe Collection.
Right now, online sales pose the most interesting question for dealers, as consumers often come to a lot more well-informed than in the past, now often with the car they want to buy, and take fewer trips to dealers for research purposes before making a decision.
Some dealers, like Sharpe, see online sales as a “magic bullet,” as some consumers will want that option.
“The process has changed quite a bit,” said Sharpe, who has sold cars for more than 20 years. “There’s a consumer base out there that would want to (buy online) and some wouldn’t. We as a dealer and representing manufacturers, we need to sell a vehicle online and one here. That’s where I think with what we saw with big-box stores that couldn’t compete well enough online and at the store. It’s offering all the channels.”
Other dealers are more confident a large majority of car shoppers always will want to see and touch a car before making a final purchasing decision, like Dan Pfeiffer salesperson Michael Walden. Walden said Lincoln sales at the Pfeiffer dealership are up over last year.
“They can look at a car all they want, but the real question is, ‘Does my butt fit in this seat?’” Walden said, explaining why customers come to the dealership. “The truth is no car maker is making crap today, so if you’re spending $50,000 or more on a car, you better like the way it rides. Subtleties make a difference.”
Walden did say Pfeiffer Used Cars is experimenting more online, including making sales simpler, such as “no haggle” pricing, which requires aggressive pricing. Pfeiffer’s used car sales also are up, according to Walden.
Automotive dealers are a significant chunk of the Michigan economy. According to a National Automobile Dealers Association 2015 report, Michigan has 602 new car dealerships, creating 35,255 jobs and $25.7 billion in sales.
A recent study by Autolist.com suggests vehicle buyers are looking for a way to move their car buying transactions online. The study surveyed 6,268 vehicle owners and more than 20 percent said they would prefer to skip dealerships.
Respondents largely do enjoy the test drive option at dealerships but fear the potential of being ripped off.
With the more informed customers and sour reputations car salespeople can carry, both Sharpe and Walden said personal relationships and selling service is the most important piece now. Both Sharpe Land Rover Jaguar and Dan Pfeiffer Lincoln have renovated in recent years, partially to maintain brand requirements but also to better appeal to customers.
Walden said one of his co-workers, a 35-year salesperson, recently finished a deal with a third-generation customer, reiterating the fact of how important salesperson relationships can be to a customer.
Sharpe said customers can begin buying the car online to help streamline the process, but the connection between staff and customer has to be there, as they hope to provide servicing for the vehicles and future sales, as well.
“We need to ensure people are well-trained and focused solely on the customer and making sure we deliver what they’re expecting,” Sharpe said. “It’s what we do on the ground and experience we provide that separates us from everyone else.”
As for the technological changes, Sharpe believes the customer ultimately is in the driver’s seat, at least for autonomous vehicles, as he believes many drivers still will want to drive their cars.
“Technology will either be pushed into the market by the manufacturer or government, or pulled in by the consumer,” he said. “There are a lot of variables up in the air on so many technologies, from R&D to the consumer. There’s a lot that has to line up to make that work between R&D and the end user.”
Despite the changing times, automotive dealers largely are faring better than their big-box brethren. According to NADA, the nation’s more than 16,000 new car dealers sold 17.4 million cars in 2016, with a forecast for this year of 17.1 million, which NADA Chief Economist Steven Szakaly said is “still a very, very strong year.”
Szakaly credited the back-to-back record years of 2015 and 2016 to positive GDP growth, employment rates, rising consumer confidence, positive equity markets and oil prices.
Cars still are moving off the lots, and at a quick pace, so the uncertainty is not like the Great Recession, Sharpe said.
“Do I sit here and think it’s (the financial crisis)? No,” he said. “As a retailer, we need to position ourselves constantly to be innovative and try new things. If we do things the same old way, we’ll be left behind by our own doing.”