As we look ahead to 2024, we can see a noticeable shift in how consumers research and buy cars that will continue to impact the industry into the new year and beyond. The traditional in-person car buying experience has largely become a thing of the past. Today’s car buyers are well-informed and are increasingly seeking convenient and enjoyable digital shopping experiences. This has a number of implications for the retail automotive industry, and fortunately you can position your dealership to better align with rapidly shifting consumer preferences.
The Dave Cantin Group team consists of experienced M&A professionals with a wide range of skills and backgrounds in the dealership-based industries, such as automotive, motorcycles, heavy trucks, recreational vehicles, and powersports. Get in touch with us now to start a conversation with one of our skilled M&A specialists on the digital dealership transformation in 2024 and beyond.
The Shift to Online Car Buying
Prospective car buyers are increasingly turning to the internet to learn more about the cars that they are shopping for. According to a recent survey conducted by Google, 92% of car buyers research cars online before purchasing. Extensive pre-purchase consumer research has changed the car shopping experience. Factors like these will likely have a major impact on your sales operations, including your marketing, as well as your choice of targets for acquisition. Today’s buyers are much more informed than they were in the past and rely on a broad range of online resources to conduct research, including:
Manufacturer Websites
Most major carmakers allow buyers to select and build their vehicle right on their website. This allows them to choose everything from available trims to colors to option packages. This feature is valuable even for buyers who do not intend to order a vehicle through the website, since they can learn more about the manufacturer’s models and what they are looking for. Some websites even offer virtual showrooms that help buyers visualize their vehicles.
Dealership Websites
Local dealership websites allow buyers to easily browse inventory, pricing, and promotions. Digital technologies such as chatbots streamline communication between buyers and dealers to make the process more convenient.
Car Buying Websites
Car marketplaces such as Cars.com and Autotrader.com aggregate listings from local dealerships, providing a centralized platform for buyers. They provide advanced search filters, reviews, and even pricing tools that give buyers a plethora of information.
Car Review Websites
Many potential buyers read reviews from automotive experts on websites like Consumer Reports and Car and Driver, finding these independent reviews on performance and reliability to be trustworthy.
Social Media Platforms
Social proof has become increasingly influential in purchasing decisions and the automotive sector is no exception. Buyers turn to platforms like Facebook, X (formerly Twitter), and automotive forums to gather information and insights and seek recommendations from their peers.
Price Comparison Tools
Websites that offer price comparison features and financing options across different dealerships to help them find the best deal are becoming increasingly popular. For instance, Truecar.com provides detailed price information that tells buyers what the “out-the-door” price should be for a specific vehicle.
Yet consumers are not just researching cars online. One study from McKinsey found that some 80% of car shoppers are now open to buying a vehicle entirely online. This represents a 50% increase compared to before the pandemic, in which buyers became more accustomed to the idea largely out of necessity (e.g., a hesitancy to visit public places). Younger generations tend to be more tech-savvy and are particularly open to buying a car online, with another study finding that most car buyers under 45 prefer a shopping experience that is entirely online.
Educating Consumers on the Digital Car Buying Process
The transition to online purchases, however, is not without its challenges. Some consumers, particularly those from older generations, are more hesitant to conduct large financial transactions online. The biggest concern for most is not being able to see or test drive the vehicle before buying it. Some others include shipping arrangements and fees and the return process for cars that do not meet the buyer’s expectations on delivery.
Dealerships can overcome some of these concerns by creating informative content and improving the customer experience. For instance, some dealerships create videos showing 360-degree views of both the interiors and exteriors of vehicles. According to one survey, nearly 7 out of 10 buyers reported that these types of videos could convince them to purchase a vehicle without a test drive. Some ways that dealerships can streamline the online buying process include delivering documents electronically and offering free home deliveries – an approach that companies like Carvana have helped popularize.
Building and Maintaining Long-Term Relationships in a Digital Age
The dealership-customer relationship has always been an integral component of the car-buying process. As Deloitte noted in a recent study, consumers across markets continue to trust the dealer where they originally acquired or normally service their vehicle. This signals the important role that dealers continue to play in maintaining customer relationships – with repeat business and word-of-mouth being indispensable to a dealership’s long-term success.
But with more customers shopping online for vehicles, how can dealerships establish and maintain these types of relationships? The components of a healthy relationship remain the same as they have always been – trust and communication – but the means are slightly different. Trust is formed through things like customer reviews and testimonials, access to detailed vehicle descriptions and vehicle history (e.g., a vehicle’s Carfax report), and detailed video content.
Good communication involves meeting customers on the right channels, and being available on different channels, such as social media, a chatbot or mobile app, e-mail, and by phone. When it comes to communication, technology can play a key role. A solution like customer relationship management (CRM) software can help manage communication across multiple channels and provides features such as automated reminders to ensure customers are kept in the loop.
Partner with the Dave Cantin Group and Make 2024 Your Dealership’s Best Year Yet
The automotive industry is experiencing a significant transformation as consumer preferences continue to veer toward digital retail experiences. Dealerships that recognize this and take steps now to adapt are poised to thrive in 2024 and beyond.
At the Dave Cantin Group, our team is built from financial and automotive M&A specialists who stay up to date on the latest industry trends. We have a proven track record of helping automotive dealerships achieve growth and innovation by connecting businesses and facilitating deals. Our team has successfully concluded transactions totaling billions of dollars in value across a range of automotive and dealership-based industries. Contact DCG to speak directly with our automotive M&A team and learn how our expertise can help your next M&A transaction succeed.