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Investigation: Will online car sales allow car dealerships to go back to work?

Time 2 years ago

Car dealerships in America are rapidly introducing online car sales solutions as they attempt to continue doing business amid the coronavirus crisis.

While car showrooms remain closed, many states are allowing dealerships to operate online – and experts believe a similar model could be introduced in the UK when the lockdown eases.

A huge number of US dealerships are flipping their businesses online – with some claiming car buying ‘may never be the same again’.

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In Michigan, the governor has ruled dealers must be closed to walk-in traffic, but has specifically allowed them to facilitate online sales.

The order says:

Workers at motor vehicle dealerships who are necessary to facilitate remote and electronic sales or leases, or to deliver motor vehicles to customers, provided that showrooms remain closed to in-person traffic.’

Rhett Ricart, chairman of the National Auto Dealers Association, told the Detroit Free Press that by the end of the year he believed 80-90 per cent of US new car dealers would have full online car sales functions in place.

Ricart, who is CEO of Ricart Automotive Group in Columbus, Ohio, said that his online car sales had doubled in the last six weeks.


It is directives such as that seen in Michigan that have pushed American dealers, who had yet to invest in online sales solutions, down the e-commerce route. 

Test drives cannot be facilitated at the moment, but everything bar the final signature on the paperwork can be organised online. However, if legislation changes allowing for online signatures of documents, the whole deal could soon be organised online.

This American dealer has taken to creating videos of successful online sales to show other customers how easy the process is. 

Ryan LaFontaine, chief operating officer of LaFontaine Automotive Group, which represents 18 brands in southeast and mid-Michigan, said there was a ‘new norm’ for car dealers now.

He said: ‘All dealers are being forced to adapt. We’re refining the process now to sign and finalise the deal off-site. People are changing their buying habits. Online platforms are as important as bricks and mortar.’

The dealership is using video solutions like Zoom to showcase walk-arounds of cars and sell to potential customers.

Chris Franklin, general manager of Don Franklin Auto Group in Kentucky, told the 13WBKO news channel that his firm has adapted to sell cars online.

He said: ‘Everyone has had to adapt during these unprecedented times. We are not used to doing things this way, but we are getting used to it. You can do the entire purchase on our website now and we can deliver to customers or offer kerbside delivery.’

The explosion in online car sales is making big news across the States with many local news channels reporting on dealerships making the switch.

Similar scenes could happen in the UK, say experts, as the lockdown is partially lifted to get the economy moving again.

Car dealerships could operate online and allow contactless handovers to new customers at home or at a showroom with social distancing measures observed and everything fully disinfected.

Giles Smith, chief executive officer of GForces, said his firm had seen a significant increase in demand for its NetDirector Auto-e platform online sales platform and he thinks what is happening in the States could become normal in the UK too.

‘We have seen a significant increase in demand and in particular our customers have asked for accelerated delivery times. 

‘This is mainly due to the fact that dealers understand that social distancing will continue for at least another 12 months and that online channels with appropriate social distancing handovers will be an important method in which to continue to trade.

‘The sooner they have this capability, the sooner they can begin to trade hence the accelerated delivery times – essentially dealers are preparing their businesses at a rapid rate.’

While taking a severe hit in some areas of its business, GForces has seen a 250 per cent increase in platform sales and April looks like that could increase to 400 per cent as dealers scramble to get online solutions in place.


Smith added: ‘There has also been a rise in OEM network sales as the manufacturers are looking how to support their dealer networks and e-commerce enable them. This is not just the UK but in the other markets we operate in.’

400
GForces percentage increase in e-commerce platform sales in April

Smith thinks this pandemic could be the shake-up the industry needed to facilitate an uptake of online car sales solutions – something his firm can get in place for existing customers in just two weeks, or around a month for new clients.

He said: ‘In our opinion this will change the retailing model forever – dealers will still operate, but online sales is now an essential tool of their armoury as it enables them to trade with customers who will not seek to go to the dealership but rather have a vehicle delivered to their home with appropriate social distancing measures in place for the handover. 

‘We have seen a dramatic upsurge in online transactions which we predict will accelerate significantly once the official lockdown is eased but social distancing remains until a vaccine is available. 

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‘The world has changed and social distancing will mean new forms of retailing will need to be implemented.’

More: How can car dealerships keep running during the shutdown?

More: Read our Help & Advice guides for car dealerships

James Baggott's avatar

James is the founder and editor-in-chief of Car Dealer Magazine, and CEO of parent company Baize Group. James has been a motoring journalist for more than 20 years writing about cars and the car industry.

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