COVID-19 is not the first setback to the Detroit Three has endured. Through a war, recession and now a pandemic the industry has overcome many hurdles.
At some point, we’ve all felt like a chump in a car dealership showroom, waiting for the salesperson to emerge from a shrouded back office where they presumably spent the last 20 minutes pushing a hard-nosed manager to chip another $100 off the price of that car you’re haggling over.
After hours at the dealership, it feels like an endless game that you’re destined to lose.
But that exhausting and enigmatic car-buying process at bricks-and-mortar stores will be a relic of the past in the aftermath of the coronavirus pandemic, industry experts predict. Mandated stay-home orders have forced car buyers and dealers to adopt a new ‘bricks-and-clicks’ model instead.
“I can order my groceries to my door, I can order new running shoes to my door … every part of our life right now is delivered,” said Jessica Stafford, general manager of Autotrader and Kelley Blue Book. “Our studies have shown that in the COVID-19 world, I want to be able to have a virtual walk around the car and be able to talk to the dealer. You bring it to my house, it’s clean and I can test it. If I do buy it, you bring it back to my house for final delivery.”
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Many dealers already do some sales online, but few had offered home delivery prior to the pandemic. The emerging car buying model puts the buyer in the driver’s seat with transparent pricing and more options. Those dealers who can’t adapt to it will die, industry observers said.
Test driving cars at home, deliveries
Jonathan Winingham, 34, of Cartersville, Virginia, likes being in control when he’s buying a car.
Winingham knew he wanted a 2020 Honda Pilot SUV to replace his 9-year-old Toyota Sienna minivan.
So in early May, Winingham, a firefighter and paramedic who works 72 hours a week, shopped online and found a Pilot in silvery blue. He closed the deal largely online and was prepared to drive nearly two hours to Carter Myers Automotive’s Valley Honda in Staunton, Virginia, to get his new car. But he didn’t have to.
“They offered to deliver it and they showed up with gloves and masks on to my home and everything was sanitized,” Winingham said. “They let me test drive it at my house and it was perfect. We signed the paperwork and that was it.”
For Winingham, price is the determining factor in a purchase. He has used online shopping in the past to find the best deal, once saving $4,000 on a past purchase, then driving to a Kentucky dealership to take delivery.
But this experience, with home delivery, has convinced Winingham there’s no other way to buy a car in the future.
“I can sit in my home,” Winingham said. “I don’t have to go to a dealership and go through that eight-hour process and then wait to sign the paperwork.”
Winingham secured a 60-month loan at 0.9% interest from Honda and he got a $500 discount as a first responder and $1,000 off on another promotion.
“Because of the coronavirus, the deals are very good,” Winingham said. “I searched Honda’s website and I looked at different websites and what dealers priced it at. You have to do your homework. Just because there’s a deal out there doesn’t mean you have to rush out and make a purchase.”
That’s also why he likes home shopping. He has control over the purchase process as well as a stronger knowledge about prices and deals.
“I can send an email or a text message to a dealer, go back to mowing my yard and when I have time, I can look at the response,” Winingham said. “I have time to then review and consider my purchase. It’s less pressure.”
Traditional car salesperson gone
Carter Myers Automotive in Charlottesville, Virginia, which has 15 stores throughout the state, has seen its online vehicle purchasing steadily grow since mid-March.
CEO Liza Borches says home deliveries have shot up from less than 5% of new-vehicle sales to nearly a quarter of all sales. She said she expects online buying and home delivery to proliferate.
“We are marketing it to our customers,” Borches said. “Our customers are used to ordering products and having them delivered to their home in other areas of their lives. We have a three-day return policy.”
No one has asked for a refund for an online car purchase yet, she said.
The biggest change Borches expects after coronavirus is in hiring. Gone are the traditional car sellers who are being replaced by product experts who are well-versed at communicating across all mediums.
“The sales associate sitting in the showroom waiting for the customer to come in won’t exist past COVID,” Borches said. “They need to create relationships in person and online.”
Less negotiation required
On the other side of the country, online sales fit the Del Grande Dealer Group in San Jose, California, which already offered no-haggle used-car pricing. It has competitively priced new vehicles to require little negotiation, said Jeremy Beaver, president of Del Grande.
But before the pandemic, the group did zero home deliveries. That changed in April when it delivered all the cars it sold “because we had to,” Beaver said referring to the lockdown.
He sees home delivery as the new normal now. It offers dealers a chance to win new customers by providing stellar service.
“Right now, it’s due to safety, because people don’t want to leave their house,” Beaver said. “In the future, it’ll be the ease of the transaction and the speed. There is no waiting, if you do have to come to the dealership, you just have to check a couple of boxes and you’re done.”
Online car sales are the future
Dimmitt Chevrolet Inc. in Clearwater, Florida, has done a “handful” of home deliveries since March, but online transactions have “increased dramatically,” owner Larry Dimmitt said. The buyers still come to the store to get the vehicle, where he has outdoor desks set up.
A third-generation dealer who has run his store since 1972, Dimmitt knows how to survive. He said online sales and home delivery are the future.
“The harder and quicker we adapt to that, the further out ahead of the herd we will be,” Dimmitt said. “It’ll deal a bit of blow to some of the weaker, more remote stores. There’s more necessity to generate more gross profit than relying on fixed operations. And, we’ll have to do a real inventory of personnel and face the new reality of combining jobs or let people find something else.”
For consumers, he said, online shopping makes the buying process less onerous because of price transparency. But Dimmitt can’t help but wonder if it takes the thrill out a car purchase, making it just another transaction.
“Some of our products are becoming only commodities. It doesn’t look to be as much fun as it used to be,” Dimmitt said. “Something like a white, four-door Malibu, there’s not a lot of emotion there, it’s like a Maytag.”
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