The coronavirus is changing how people buy cars and get them serviced — behaviors likely to last long after the pandemic is over.
Why it matters: Confined by stay-at-home orders, people have discovered that getting a new car delivered is as easy as ordering groceries or takeout. Experts say they may never visit a showroom again, with consequences that will reverberate on every Main Street in America.
The big picture: It's already happening in China, where car sales are rebounding and dealers are reporting a sharp rise in virtual-showroom visits, writes ZoZoGo consultant Michael Dunne in Automotive News.
- Chinese customers can buy a car online from Geely and have it disinfected and delivered to their home.
How it works: In the U.S., consumers already do much of their car-buying research online.
- Now they can see a dealer's inventory online and build their own financing deal, adjusting payment options, and factoring in the value of a trade-in vehicle or added warranty.
- Credit approval happens online, too.
- Companies say a three- or four-hour showroom visit can be compressed into a 15-minute online process, plus another 30 minutes for home delivery.
Car dealers have been cautiously exploring online sales for years, but the economic toll from the health crisis has abruptly shoved them into the digital age.
- Orange Coast Auto Group owner Jon Gray says business at his Fiat Chrysler dealership in Costa Mesa, California, is down 50% since the pandemic struck, but online sales are picking up steam since he introduced the option a month ago — four months earlier than he'd planned.
- "Without a doubt when the coronavirus is over, this is going to have legs."
"If there's a silver lining to this crisis, it is the rapid adoption of digital tools and processes" to modernize the car-buying process, says dealer strategy expert Dale Pollak, senior vice president at Cox Automotive.
Yes, but: Not all dealerships will be able to adjust quickly, which will likely lead to consolidation.
- The advantage could go to large regional dealer groups and publicly traded giants like Auto Nation.
- Smaller dealers that have thrived for decades on personal relationships polished at the Chamber of Commerce or as sponsors of Little League teams could be squeezed out, says dealer consultant Mark Rikess.