11:12 am, August 4, 2020
Trade-ins and value-added products are proving the biggest hurdles for dealers swiftly embracing online motor retail tech in the post-lockdown used car sector.
That’s according to online motor retail technology specialist iVendi, whose chief executive said that many dealers that had been forced into adopting trading models combining an online journey with reserve-and-collect were facing a steep learning curve when it came to choosing new products and services.
James Tew said: ‘This is no reflection on dealers, but the coronavirus crisis has meant that many have had to effect a transformation into becoming digital-first businesses in a matter of weeks.
‘Decisions are being made very quickly, and while the vast majority of what is being implemented appears to be working extremely well, we are also hearing feedback about problem areas. The two that stand out are trade-ins and value-added products (VAPs).’
The problem with most online trade-in technology, he said, was that it dealt with the part-exchange in isolation, providing a very conservative valuation in general.
‘If you were in a dealership talking to a sales person, this almost certainly wouldn’t be the approach. The part-exchange value would be worked into an overall finance calculation that was designed to get as close as possible to your monthly budget.
‘Online, what tends to happen is that a valuation is presented as a single, often disappointing figure, and not as part of a comprehensive deal. There is evidence that the buyer drop-out rate at this point in the online journey is very high.’
Tew said dealers needed to look at online trade-in tools that worked best for them, but in many cases the best one currently available was simply a form that let the dealer make a human assessment.
‘Some of the solutions available work well for some dealers but there is a very strong argument that taking the part-exchange offline is the most effective answer for many retailers and their customers. While it disrupts the purity of the digital journey, it also removes what is a significant issue in many online motor retail journeys.’
Problems were also arising with VAPs, he said, although it was an issue that could probably be more easily sorted and for which proven expertise existed.
‘In many used car sales, VAPs are the source of much of the profitability, so preserving levels of penetration when sales switch to online is very important.
‘The issue for most dealers is that where VAPs are offered digitally, they are simply displayed as a product and a price. There is no real attempt at making a sale, at showing their advantages and how they apply to a specific consumer.
‘This is really a matter of presentation and something that can be much improved through better website design and integration into the overall sales process.’
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