- Car sales have declined precipitously in the weeks since the COVID-19 outbreak took hold in the U.S.
- Car dealers largely weren’t ready for massive online shopping but are rushing to adopt online tools as COVID-19-related shelter-in-place orders keep customers from coming to showrooms.
- We’ve laid out the pitfalls, but with a vast majority of customers wanting online options, the car dealers are going to figure this out sooner rather than later.
Go ahead and add buying a car to the list of things that the coronavirus pandemic has changed forever. While car dealerships remain open even in states with shelter-in-place orders, the rhythm of the traditional car purchase suddenly seems impossible. And despite pushes from companies such as Tesla and Carvana to reshape the car-buying experience in recent years, most traditional dealerships currently lack any online shopping tools at all. But as shelter-in-place orders force would-be car buyers to stay home, TrueCar reported a 37 percent sales decline for March and predicts an even bigger drop in April. Car dealers are finally being forced to adapt—and adopt new technology—in order to survive.
Michelle Denogean, chief marketing officer at Roadster, a company that sells a platform of tools to help dealers sell cars online, estimates that only about 20 percent of car dealerships had any online shopping tools pre-pandemic. In the first few weeks of the pandemic, Roadster saw up to four times as many calls as usual from dealers and manufacturers interested in adopting Roadster’s platform. Rhett Ricart, chairman of the National Auto Dealers Association (NADA), expects “80 to 90 percent” of dealers to have full e-commerce capability by the end of the year.
There are, of course, some obstacles to the seamless online car purchase. The fact that the vast majority of car buyers need to take out a loan to close the deal means that most purchases will still involve a conversation with a human about the terms of that loan, even if that takes place via a phone call. And though you can e-sign your tax return, most states won’t allow you to e-sign for a car. The desire to test drive a car before you buy it presents its own challenges in a time when every trip outside the house is carefully considered.
Roadster is working with dealers to tweak the car-buying process for a no-contact world. That means re-imagining the test drive (maybe a salesperson drops the car at your house and comes back for it the next day) and working to inform customers about sanitation efforts in states where showrooms are still open. Carvana has instituted no-contact pick-up and delivery systems to minimize person-to-person contact. Customers who choose home delivery can sign their contract while the delivery driver waits in the truck outside, then drop the contract in the mailbox for the driver to pick up.
There’s no reason to think that the shift to car shopping will be temporary. For one thing, dealerships have an incentive to use the online tools: they’re rich in the kind of data that most retailers have been exploiting for years. Roadster’s tools allow dealers to track a customer’s shopping journey, so that when a customer finally picks up the phone or walks into the showroom to make a deal, the salesperson can use their name and e-mail address to see which cars and loan terms the customer was researching before coming in.
More important, lots of customers want to buy their cars online. Carvana’s research says that 97 percent of shoppers are already using the internet to research cars, and 75 percent would consider buying a car online. Roadster hopes that building a robust, easy-to-navigate platform will make the transition to e-commerce easier. “It’s never going to be like buying an iPhone, but it should feel like buying an iPhone,” says Denogean. With companies like Carvana normalizing the idea of an all-online car purchase, and companies like Roadster taking on the burden of building a high-quality sales platform, there may be real change coming to the car sales model for the first time in decades.