Volvo dealers must live in the 'Amazon World'

Volvo's dealers are ready to embrace the digital new world of auto retailing, and get there before new Internet startups take the initiative, said Ernie Norcross, chairman of the Volvo Retail Advisory Board.

The franchised dealer network must address "customer pain points" with the current sales model before technology-driven startups do, Norcross told Automotive News.

"We live in the Amazon world," where consumers have become conditioned to buy at the click of a button, said Norcross, owner of Volvo Cars Memphis in Tennessee.

"The consumer would like more transparency and control over how the transaction goes from the sale to F&I, and shrink the time involved," Norcross said.

Today's car shoppers step into the dealership having done their research. They want to get in and out with minimal delay and without having to haggle or be pressured by salespeople.

Carvana and other newcomers are siphoning business from traditional dealers by addressing consumer frustration with the car-buying system.

Such digital-first retailers make choosing a vehicle and closing the sale as simple as buying an iPad on Amazon. Carvana delivers the vehicle to the consumer's home or workplace and staves off buyer's remorse with a 7-day return policy.

"I told Volvo, there's nothing Carvana does that we can't do," Norcross said. "Things that they have attacked in our business model, we can certainly adapt and overcome."

But automakers must adapt, too, he said. The burgeoning popularity of ride-hailing services, coupled with a new generation of customers conscious of their carbon footprint, threatens to tap the brakes on vehicle sales.

"A lot of people like Uber and don't want to own their vehicle," Norcross said.

In response, automakers are experimenting with new business models including ride-sharing services and low-upfront-cost subscription programs. Volvo offers a two-year vehicle subscription service for $700 to $800 a month, including insurance and maintenance.

"In today's society, subscription programs have their place," Norcross said. "The subscription program presents customers in the dealership another option besides paying cash, financing or leasing the vehicle."