Successful dealerships mix in-person interactions with online customers
Dealers should pay attention to the wall street journal reports that Carvana will lay off 12% of its workforce and faces falling stock prices after a loss of $260 million in the first quarter.
The US-based online e-commerce platform provides the same services as physical used car dealerships. Three Ivy League alumni founded Carvana in 2012 and she hit the Fortune 500 in 2021. An internal email from CEO of Carvana Ernie Garcia III and reviewed by the WSJ reports that the company has exceeded its growth strategy and plans to cut 2,500 workers
The company’s strategic missteps herald a shift and possibly a rift in the understanding of how consumers approach car buying, KC Boyce, Escalent’s vice president, told Wards. Respondents to the market research firm’s surveys show that buyers place a high value on the interaction with the dealership.
“What we’ve found, overwhelmingly, is that consumers prefer to buy their vehicles from dealerships,” Boyce told Wards. “They want to test drive, touch, smell and see vehicles. When we look at the macro picture, the idea that (buying cars) is going to move entirely online is fundamentally wrong. »
An Escalent survey found that only 20% of respondents who don’t own Tesla prefer the automaker’s direct-to-consumer approach. The majority of respondents prefer to rely on dealerships for financing (60%), delivery (85%) and repairs and service (79%). Nearly half of respondents (45%) prefer dealership staff to educate them about the different models.
Nick Boustead, sales manager for The Taverna Collection, West Park, Fla., says the data matches what sales staff learn from the roughly 150 luxury vehicle sales per month.
“When you buy a 2-year-old Honda Civic that’s still under factory warranty, you don’t really need to see it. But when you buy slightly older cars or more complex cars, it’s different,” he told Wards. “So yes, we believe in the hybrid model. Our customers can come by plane, but they also don’t have to leave their couch if they don’t want to. »
No matter what used or new cars they sell, Boyce suggests dealerships look at their customer base to decide which hybrid model is right for them. Technology that enables online educational discussions about specific cars and helps complete F&I paperwork are two ways to optimize customer time.
“Reducing some of these steps that have traditionally been done at dealerships makes sense from a customer perspective,” Boyce says. “But, again, there’s just something about this physical interaction with test drives and conversations that you can’t replicate online.”