Automotive Monthly Newsletter and Podcast
This month’s theme: Retail revolution? – Real or not?
May Podcast: Kristen Balasia, Thomas Libby, Ian
McIlravey and our special guest Michelle Denogean; CMO at Roadster,
talk about the changing retail model and consumer behaviors
accelerated by COVID-19 lockdown.
For decades, the goal of automakers the world over has been to
make buying and servicing your vehicle with their network as
convenient as possible by building more dealers in the right
locations to maximize coverage. The advent of online automotive
retailing has called this model into question, and in a 2020 study
by IHS Markit of online vehicle purchases during the peak of
COVID-19 in the United States, 64% of consumers who bought a car
online cited convenience as the primary reason.
Online sales came to the forefront during 2020 out of necessity,
but despite the return to normalcy, it appears this trend is only
accelerating. Roadster, a leader in e-commerce, conducted a study
of 1,008 customers who bought at 304 retailers across six months
ending in March 2021. About 86% of buyers had some portion of the
transaction take place online, up 42 basis points over September
2020. They also found that online customers are over 50% more
likely to add finance and insurance to the deal online compared
with in-person shoppers.
So, digital presence matters. It is a growing channel that can
drive increased profitability, but does that mean physical
locations are now less important or will become obsolete? No, but
they must adapt.
It means auto retailers are faced with a unique opportunity to
provide the best of both worlds if they can offer convenient
digital solutions to shop while adding value to the purchasing
experience online and in touchpoints that are done in-person.
Roadster notes that 89% of online shoppers still interact with
dealer staff via live chats, and 80% of those who bought 100%
online were guided in some way during configuration, credit
inquiries, etc. Retailers must plan their staffing capacity to
account for in-person and online guidance because at the core
people still want to buy from people.
Providing a guided experience, even when online, builds trust
and creates a personal connection that can be used to drive
loyalty. Dealer loyalty in the US is at a five-year low in 2021 at
35.8%, after peaking in 2018 at 37.4%, but vehicle make loyalty
remains quite stable. This means intra-brand competition is
increasing and dealers must look for opportunities to grow loyalty
and monitor for warning signs of defection.
It is becoming increasingly important to create a seamless
omni-channel purchasing experience to draw customers in and build
trust. Consumers will expect to leverage the convenience of online
tools, while getting real value out of time spent visiting the
dealership, or having the dealership come to them with mobile test
drives and service pickup. Dealer network optimization no longer
just means minimizing drive time, it also requires a critical look
at the mix of retail formats and functions across the network to
bring the greatest value throughout the vehicle buying journey and
beyond.
Dive deeper
Polk Audiences are just a click away with Polk
Dealer Marketing
How far are US car buyers willing
to travel to dealerships?
Trends in US dealer
loyalty
Optimize your dealer
network
Connect with Tanja Linken – our
expert on dealer networks
See how Catalyst for Aftersales can
grow your service revenue
Source: http://ihsmarkit.com/research-analysis/fuel-for-thought-retail-revolution–real-or-not.html
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