For OEMs, conversion companies, and infrastructure builders bringing electric vehicles, hybrids, and alternative fuel vehicles to market, there are a few things to know about auto dealers. Dealers are playing a critical role in making all of this come together, and serve as the front line for educating car shoppers on their vehicle options, incentive and rebate programs, pricing, finance, charging and fueling stations, service and maintenance, and remarketing.
Here’s what I think you should keep in mind about 10 realities dealers are facing…
1. There are less dealers than there were four years ago – about 4,000 less franchise dealers in the US than there were in 2008. Some of these dealers became independents and are doing a lot in used vehicles and Buy Here Pay Here. For many franchise dealers, there are less employees doing the work, and they’ve got to do a lot more to handle with digital marketing and social media. When you add marketing plug-in electric vehicles, or whatever the new product might be, the plate is full during these changing days.
2. Digital marketing makes for a bigger slice of the pie. Dealers are spending less on printed media, TV spots, and radio, and more on social media, website banner ads, smartphone applications, video, etc. Automakers are just breaking into digital marketing campaigns for green machines, but it’s likely to be a more important method than traditional marketing tactics.
3. Dealers are just breaking into green machines. When you go the NADA and NIADA conferences, there’s very little presence in exhibit halls and speaker panels on this issue – nothing from Tesla, Fisker, or other startups, major automakers are focused on other products, infrastructure suppliers are not there, etc. Toyota and Honda dealers have been selling hybrids in the US since about 2001. A small number of Nissan dealers are selling Leafs, and more Chevy dealers are marketing the Volt. There’s a lot of flex fuel vehicles on the market from Detroit, but consumers are not yet interested in it, or aware of it. There’s a very small number of fuel cell vehicles on the market now, mainly being leased in California. If you add natural gas vehicles and propane autogas vehicles into the mix, those transactions are conducted outside dealer operations typically. These alternative fuel vehicles are mostly purchased by fleets and those are sold like other fleet vehicles – directly from OEM to fleet, with a small number of dealers providing their name to the transaction and getting a small dollar amount per sale; or it just goes directly from OEM to fleet customer, depending on state dealer laws and regulations. As the numbers grow for EVs and hybrids, you can expect to see a lot more dealer presence in the game and at their conventions. You can find a few dealers already into it heavily, with Mike Sullivan, owner and president of LAcarGuy, coming to mind. His dealerships market a lot of hybrids and he’s actively promoting the Fisker Karma.
4. Consumers are much more demanding now than four years ago. Remember the “Me” generation in the 1980s? Well, that mindset is prevalent today, and the Me generation had kids who are now old enough to shop for cars. Social media, smartphones, and other new technology innovations have stepped it up – dealers are expected now to be transparent, honest and straightforward, prompt (instantaneous would be a more accurate word), and clearly explain all the options at the lowest price and greatest value. Consumers are accessing information through Edmunds.com, AutoTrader.com, kbb.com, TrueCar.com, Autobytel.com, and other sites, to be well informed on their choices. Customers want their product customized to be exactly what they want. If you’re selling hybrids and EVs, which are definitely higher priced than comparable ICE vehicles even with incentives and rebates, you and your staff have to be trained on how to effectively and promptly deliver the information.
5. There’s a lot of data being collected now on customers and shoppers/visitors. Be careful what you do with it. Consumers are more open now to being contacted by dealers through phone, email, snail mail, etc. But it you cross that invisible line, you’ll lose them. Consumers need to have a certain level of privacy and freedom – it’s a big part of the cultural norm, and respect and realistic limitations must be factored into the marketing strategy.
6. Dealer education is (desperately) needed. If I go to a dealership in my town and shop for a plug-in electric vehicle, and I have questions about the pricing, options, charging station installation in my garage, loans, service, etc., and I see that salesperson sifting through a brochure to answer my questions, I will get out of there and go find another dealer. I’m not the only one. As mentioned, consumers are more demanding now, and with the added value and complexity of connected cars and telematics, dealers must have a few trained sales people who can effectively answer questions and convert leads into sales. Dealership management, parts and service departments, CPO and remarketing, internet marketing, sales managers and staff – the whole team will have to be trained on effectively answering customer questions and making their experience satisfying.
7. Dealers can be innovative, influential stakeholders in their communities. In a lot of cities, dealers are celebrities and have been on local TV commercials, event sponsorships, active in chambers of commerce, and are known and respected by city councils – they provide jobs, tax-base revenue, and much-needed transportation. If a dealer gets into green machines and starts promoting them, they are going to reach a lot of people. If they have special car shopper days with ride and drives, and special promotional incentives, results will be produced.
8. Dealers are adapting to the fact that many people dread visiting them. Along with smartphones, connected cars, digital marketing, brand consolidation, and other changing market forces, there are some core cultural issues that are under the surface. For a lot of consumers, going to an auto dealership is like going to the dentist – something annoying, and possibly painful, is going to happen, and they’re going to dash in and out of the experience. There’s a famous scene from the 1996 movie “Fargo” in a dealership office where a husband becomes very angry at his salesman, as his wife tries to quiet him. The salesman says he’s going to talk to his manager, and just disappears for a couple of minutes in another room to find out who’s winning the football game. If anything like that happens in a dealership today, it will be all over the internet in minutes, and they’ll lose customers to competitors, sometimes permanently. Many dealers have already changed over their practices, or did so several years ago, making the consumer experience much more secure, stable, and satisfying. Customer loyalty is still present, and there are more dealers out there today who are changing customer experiences and attitudes positively. Reviewing online customer ratings is helping a lot of dealers improve their processes.
9. F&I is an important part of the consumer experience. F&I departments play a big role in converting the experience to a completed sales transaction. As mentioned, hybrids and EVs are more expensive, and consumers want to know about all their options. Leasing is big right now for plug-in electric vehicles, which takes some of the sting off their higher prices. The market will adapt and change in the next couple of years, especially as more of these cars make it to used car lots. With more federal regulations falling in place for consumer rights during the car buying process, having strong F&I resources is gaining importance. There’s also the important issue of the cost of the charging station and how it will be paid for. The same is true for other alternative fuel vehicles and how they’re fueled. That will become more important in upcoming model years as more fuel cell vehicles, NGVs, etc., come to dealerships – lifecycle ownership costs, range anxiety, and affordable monthly payments must be effectively addressed by the F&I staff.
10. Dealers are multi-layered organizations – and many of them are taking on big challenges. The rules of the game have changed for dealers in the past 10 years, especially in the past four. Franchise dealers are getting into selling more used cars, and some of them through Buy Here, Pay Here programs. Certified pre-owned cars are gaining in sales volume. Leasing is making a comeback. Smaller engine, fuel efficient cars and crossovers are becoming more important than SUVs. Aftermarket products and services are growing in sales. Digital marketing is the main focus of conferences and webinars these days. Add green machines to the mix, and you can see that dealers are deluged with information and change. It’s also a good time for it to happen, as dealers are forced into getting grounded on their strengths and adapting to change. As Albert Einstein once said, “In the middle of difficulty lies opportunity.”