Amid coronavirus and contamination concerns in China, new-vehicle sales volume there dropped more than 80 percent in February. As the virus gains traction in the U.S., genuine concerns arise related to the potential disruption here and what this could mean for dealers.
Having faced some adversity early in my life, my personality type has always been to focus more on the potential opportunity of a given set of circumstances. Operating with a philosophy that "the calvary isn't coming" to save me has always provided me with greater clarity in confusing times.
Even before the rise of the coronavirus, one of the largest risks facing conventional auto dealers has been their ability — or should I say inability — to successfully engage and transact with customers online. The general inaccessibility to fully transact virtually by most dealers has paved the way for providers such as Carvana and Tesla to provide a refreshing alternative buying experience to consumers.
We are living in a decade where we expect the greatest transformation in and pressure on the franchised dealer network to come from the mobility movement.
Whether it's startup manufacturers such as Tesla, online-friendly alternatives such as Carvana, vehicle subscription services, ride-sharing providers or autonomous fleets of vehicles, dealership sales will be negatively impacted.
In light of these pending changes, most dealers are continuing to sell vehicles in the traditional fashion with no actionable plans to change.
With the coronavirus poised to disrupt U.S. sales, I see the silver lining as dealers being forced to improve their online presence. Knowing that a disruption is coming with the mobility movement in the coming years, dealers should seize the opportunity the coronavirus crisis is providing to improve their online presence.
With the national emergency declaration, U.S. dealers are likely to be impacted to an extent similar to what China experienced in February. We are looking at an estimated 75 percent drop in new-vehicle sales over the next 30 to 60 days, with comparable drops in pre-owned sales and likely greater in parts and service.
Some marginally capitalized dealers might not survive more than a few weeks under these circumstances.
How prepared is your dealership to transact online?
This is not just about having a little chat pop-up window on your website that is handled by a third-party provider.
- Does your dealership have a process by which you appraise a customer's car remotely?
- Do you have a process by which you will take a car to a customer's home for a test drive?
- Can a customer complete the entire transaction without stepping into the dealership?
- The same goes for service: Can a customer's car be picked up or pre-diagnosed remotely without an exorbitant tow bill?
One early lesson coming out of China is dealers' challenges in transacting remotely with customers.
This is different from social engagement; this is the ability to get cars over the curb or up on a lift without a customer having to set foot in the dealership. As a dealer, I wouldn't be waiting for the manufacturer, DMS provider, dealer association or vendor to come up with a silver bullet on how to help me through the coronavirus or mobility disruption.
Change comes from within, and how you view and position your store to engage in a changing environment will determine whether your dealership will survive the threats and disruptions to come.