Throughout this series we’ve talked about how digital technology plays a central role in the modern auto shopper’s journey. Let’s take this a step further and ask a central question, one that keeps a lot of local dealerships up at night: Are online car sales the way of the future and, if so, how long will it take consumers to ask themselves, “Why do car dealerships exist?”
It’s a vital question, and one that could transform the way that the industry as a whole does business. To take a crack at it, let’s talk through three very important statistics.
The super-powered eighty-one percent, or why mobile adds up to more than a phone.
According to Pew Research, eighty-one percent of Americans own a smart phone. This matters for car dealerships for two highly interconnected reasons.
The first reason has to do with how smart phones are being used now. There are dozens of findings and statistics out there about mobile device use during the auto buyer’s journey. They tell us that car shoppers frequently search for static car images on their mobile devices, tend to visit dealer sites on desktop computers during the workweek and use smartphones over the weekend, that they make last-minute price comparisons when they’re on a dealer’s lot, and so on. All of these findings are useful for user engagement, planning campaigns, designing a dealership website, and so on. Most of the articles you’ll find on automotive sales and mobile devices focus on how smart phones are being used now
The second reason has to do with how smart phones could be used. This has less to do with how car buyers use their smart phones now; and more to do with the fact than anyone with a device and a data plan has the power to pull up reams of information about cars, local dealerships, you name it, at any moment in time.
Mobile searching has already changed customer expectations in terms of speed and convenience. What may be of more interest is what happens if consumers decide that their phone has, or should have, all the information they could possibly need to buy a car. As search algorithms improve, the amount of online information increases, and the results become more customized toward individual users, the car buying process may come to seem like something that individual shoppers can manage with a few good web searches.
This could transform the way car dealerships do business.
The unthinkable sixty-four percent, or why video could change the car buying process.
Sixty-four percent of car buyers who use video for online research claim that high-quality formats, such as 360-degree video, would convince them to buy a new car without a test drive.
For those of us who grew up with the uncertainty of going to a dealership and hoping that you wouldn’t drive off the lot with a disappointment, much less a lemon, the notion that YouTube could sell a car more or less on its own to that many consumers is simply mind-blowing. This statistic, which comes from an excellent piece by Google, suggests three things:
Video is a central part of the car buyer’s journey.
Video quality (as well as the quality of the devices playing it) is getting to the point where it is a close substitute for “being there.”
Car buyers are extremely confident in their online research as it relates to cars.
The basic recommendation for car dealerships and manufacturers is simple – invest in video. Something a dealership can do today is look into YouTube and targeted display ads that incorporate video, with the goal of staying top of mind as shoppers watch car video blogs (a.k.a vlogs) and take virtual test drives.
Going deeper, Google recommends creating and/or sharing video content that helps viewer imagine him or herself owning the car. This content can run the gamut of replicating what it’s like to sit behind the wheel, to performing high-speed maneuvers that would earn the average driver a ticket. Google also recommends creating unique and exclusive content. For instance, a dealership in the Denver area might find it worthwhile to mount an in-car camera in a 4×4 and take it for a spin on a rugged mountain pass; thereby creating unique content that is also relevant to the local market. Google also finds that consumers are looking for longer form content that covers a broad range of vehicle-relevant subjects. Current examples of longer form content that see strong engagement numbers are maintenance videos, reviews, and car vlogs.
The underlying recommendation Google makes is that manufacturers and dealerships should create video content for as many driving and ownership scenarios as possible. What might this mean in the long term?
In 2012, Volvo released an augmented reality game to coincide with its launch of the S60. This was done to appeal to a younger demographic rather than simulate the experience of driving the car itself, but as simulations – be it video, AR, VR, whatever – get more sophisticated car buyers may decide it can do without car buying rituals like test drives and dealership visits. This shift in buyer mentality would be much more important than how advanced, lifelike, or “good” videos and simulations get. The sixty-four percent who say they would buy a car based on a video alone seem to be moving in this direction.
The 40 million car question, or why used vehicles are a wild card.
40.42 million used cars were sold in the United States in 2018, accounting for around seventy percent of all auto sales.
This is important because unlike new cars, where every vehicle that comes off the assembly line should be identical with the car that came before or after it, every used car comes with a story. A one year-car could have been driven ridiculously hard by a lunatic owner, and a ten year-old car may have barely made it out of the garage. The forty million car question is whether online data, life-like videos, and digital convenience will be enough to convince individual buyers to spend thousands, or tens of thousands, of dollars on a car with a history all its own.
The dealerships who currently operate online offer transparent pricing, return policies, and relaxed contract signing; benefits that buyers could come to value more than the touch-and-feel aspects of the dealership experience. Dealerships might find that certain kinds of vehicles, say, lightly used ones, are better candidates for online sales than others, creating a mix of car buying journeys. Dealerships might also find that local consumer culture plays a role; with some market segments, demographic groups, and U.S. regions feeling very comfortable with buying a used car online while others stick with brick-and-mortar dealerships.
It could also be that, for as-of-yet-unknown reasons, online car selling falls flat.
Sage advice from Yuval Noah Harari.
There’s a fantastic book about the future called Homo Deus: A Brief History of Tomorrow. The book was written by an Israeli historian named Yuval Noah Harari and it talks about how emerging technology – computer algorithms, gene editing, etc. – will impact life in the twenty-first century.
Some of what the author has to say is alarming but he brings up an excellent point: the act of thinking about and talking about the future is a way to change it.
If you’re worried about being on the losing end of online car sales, it makes sense to think about the current trends and seek out a way to chart your own course in a changing world. If you see online car sales as an opportunity, it makes sense to think about current trends and seek out a way to capitalize on the changes that are taking place.
The future of the auto buyer’s journey is in your hands.
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