There are three concepts that have started rearing their head even more whilst we’re in this pandemic within the automotive industry, transparency and anonymity, the enablers of Automotive Digital Retailing in car dealerships:

  1. Transparency: consumers seem to be looking for more information online – the more information they find when they are searching online, that solves their pain points, the more likely they would buy that car or product.
  2. Anonymity: consumers like to be anonymous until THEY are ready to reveal who they are.
  3. Automotive Digital Retailing: much more than merely putting forms on a website. It is deep integration of the online showroom with the physical showroom. As well as deep integration with 3rd parties, like banks, insurance companies and marketplaces like AutoTrader. And it doesn’t stop there, it’s also deep digital integration of the internal processes of the car dealership.

Digital integration and adoption has compressed

As we’re all in lockdown, digital integration and adoption has been forced on us by the consumer. The evidence on AutoTrader has seen between 40% – 50% growth in traffic, engagement and conversion on our website.

Is the automotive industry is flying – No! We’ve seen a massive decline in new cars with consumers switching to used cars? Generally the industry as a whole is flat at best and declining at worst.

We’ve seen the general economic model play out in the world of automotive cars in South Africa during 2020. There has been an overall increase in consumer demand for used cars. We saw prices go up during those increased demand periods, which I can only see as the release of pent up demand when we (AutoTrader) grew at over 50%. Then prices started levelling off at 1% – 2% YoY, while growth was still high but fell to the mid 40%’s YoY.

I don’t believe a swing from new car buying to used car buying is sustainable in any economy. I keep saying that the future buoyancy of the used car market is fed by the new car market. Cut off the new car feeder and you have a used car ticking time bomb. Eventually we will have an ageing car parc in South Africa.

What is Automotive Digital Retailing?

It is taking all of the systems and processes and digitising it with one goal in mind, creating an efficient transition between a digital platform and the physical showroom, where the car buyer has a smooth transition between the physical showroom and the digital platform or vice versa.

Is Automotive Digital Retailing putting up forms on websites?

No. Many car dealerships get this concept wrong or misunderstand it. They think that Automotive Digital Retailing is all about putting up forms on websites, however, whilst it’s a good first step, it’s not quite the essence of Automotive Digital Retailing. It is much more than just putting up forms on a website, it’s deep integration between the physical showroom, the online showroom and third parties, like the banks, insurance companies, AutoTrader SA as well as the internal processes of the car dealership.

Think about this, there’s no point in putting up a form on a car dealership website only to have that form turn into an antiquated email that a human being inside the car dealership has to follow up on. That is not Automotive Digital Retailing.

An example of Automotive Digital Retailing

A consumer comes on to a car dealerships website and once they get to the finance page, fills in a form based on a car they’ve seen on the car dealerships website and applies for finance. That application should seamlessly integrate with the banking systems from the car dealerships systems all the way through to the bank and all the way back again, with little to no human intervention. The moment that that form turns into an email, a human, in most cases has to deal with it.

Many car dealerships have started implementing Automotive Digital Retailing strategies successfully and I think those are the car dealerships who are going to win in the future. The ones that will really win will be the car dealerships that employ real Automotive Digital Retailing while also building a car dealership brand online. Though some car dealerships haven’t changed since pre-COVID-19, and may be seeing benefits for now (all ships rise), in the long-run they will feel the pinch when we come out of this pandemic and used car demand switches back to new car. Or even Electric Vehicles.

Car finance & Automotive Digital Retailing

The biggest short term challenge we face when it comes to Automotive Digital Retailing is car finance. The reason that this is the case is mostly because of the banking regulation. I acknowledge that there needs to be banking regulation but on the flip side, there also needs to be transparency and efficiency. As a country we do not have the right banking regulation that creates the right amount of transparency at the moment. Validation of buyers is just one of many things that is huge part of the challenge. Some car dealerships that I’ve spoken to are trying to address these challenges and some are still trying to figure it all out. It’s not easy – car dealerships are not tech and marketing companies and battle to solve these consumer pain points – hence the need for a mindset shift – to a paradigm car dealerships are not used to.

Car dealerships should invest in the RIGHT technology

Car dealerships should invest in the right technology to implement Automotive Digital Retailing strategies as COVID-19 and lockdown has compressed consumer digital adoption. By using the right technologies, car dealerships will be able to capture the attention of in-market car shoppers so much easier.

Let’s be honest – what does a car buyer ultimately want? They want speed and convenience and ultimately to buy. Car buying consumers are more impatient now, they want things done now, they don’t want to wait. Which means if car dealerships stall, this gives an opportunity for the consumer to decide otherwise or move to the next car dealership.

Right now, there are probably 20% of car dealerships doing this as well as they can even with the barriers that exist with financial institutions or banking regulation. However, we still have some car dealerships (probably another 20%) in the long tail that are far behind and operate in the analogue world.

There are some lessons to be learnt from this time we’re in, the good news is that at the end of the day, we all want a sustainable automotive industry where we are winning and ultimately giving back to South Africa and the people that deserve it.

Car buyers want to do more online

We recently conducted a survey on AutoTrader to understand the consumer pain points in the car shopping journey especially when it came to finance. The findings from the study proved that the point of sales (POS) of the car buying finance journey needs to move on to the internet whether that be on a marketplace like AutoTrader or on the dealership website itself or both.

The study revealed:

  •   73% of consumers want to complete the entire finance journey online.
  •   80% said that they want to get pre-approval online.
  •   50% want to understand the total cost of ownership when it comes to finance.

What does that all mean? We need to actively pursue moving more of the car buying finance journey onto the internet. But first, there is a big transparency piece that needs to occur when it comes to the consumer, there’s a lot that they don’t know, or that is painful for them that I think is very possible to bring to the internet.

3 Automotive Digital Retailing tips for car dealerships

  1. Do an audit on your dealership website and make sure that you can measure everything in the car buying journey (visits, engagement and conversion).
    • Tag your website with Google Analytics to help you measure the consumer journey through your website. Find out what they are engaging with and how they’re engaging on your dealership website. Get to understand where your sources of traffic are and also how your consumer is converting through each of those sources of traffic.
    • Remember, websites aren’t about just the pretty – it’s also about the conversion, the way in which Google views your car dealership website and the successes that you get out of seeing those numbers.
  2. Digitise the internal processes of your car dealership.
  3. Employ Automotive Digital Retailing strategies.