Auto dealers are here to stay. Here’s the next step in their evolution

Most car buyers today do research online before they walk into a dealership, leveraging their access to more information than ever before—including vehicle features, reviews and financing options. With the rise of the digitally savvy car buyer comes an even greater need for a dealer who can effectively serve as an equally savvy consultant to deliver an amazing experience both online and at the dealership.

In an evolving auto market, dealers are more important than ever. Car buyers look to dealers to be trusted advisers, helping them understand the huge trove of data at their disposal. What dealers need now is the power to meet car buyers where they are in the process by integrating the online and in-person experiences based on the customers’ needs.

While the buying experience largely begins online, car buyers still say they find the in-person process important. That’s according to the newly released 2023 Capital One Car Buying Outlook (CBO)—a survey of dealers and car buyers to better understand their perspectives on the car buying process. So, the questions we should be asking are: How can dealers continue to evolve their business to bring car buyers the support they want? And how can the rest of the industry support dealers in doing so?

Car buying and ownership is an experience, and often a years-long relationship. Because of that, what people really need from dealers today is a sense of trust.

Trust, driven mostly by transparency throughout the process, helps dealers as much as it helps car buyers. In the 2023 CBO report, 76% of car buyers said they are more likely to go back to a dealership in the future after a positive experience. That means dealer trust can both attract more customers and significantly increase the lifetime relationship with each one. The same survey also found that car buyers who trust dealers are four times as likely to feel that the car buying process is transparent.

The vision to see eye to eye

Clearly, trust and transparency are linked at the heart of every car purchase. Establishing them has to start with bridging gaps in the ways each party sees the world. For example: Is today a good time to buy a car? When we asked dealers, 84% said yes. When we asked car buyers, only 33% felt the same way. These are people in the same country looking at the same economy, but they are looking at the world from different perspectives.

Here’s where dealers are coming from: They view this market as they had in 2020 and 2021—tumultuous years with big swings, inventory challenges and uncertainty. Now they’re applying it to a market that has more stability by comparison. However, dealers may underestimate the impact recent changes to the economy have had on car buyers’ purchasing experiences. Car buyers want to work with dealers they trust, and dealers have a remarkable opportunity to strengthen their relationship with them, particularly while both groups are facing unique market headwinds.

Going forward, an experience that offers the power of digital tools combined with the benefits of physical interaction on the showroom floor will be key in the car buying process. This “digical” car buying experience begins online and ends up in person, with no disconnects in between. That seamlessness is the important part. Trust erodes when a dealer treats a customer as if they have not already begun the process online—instead they have to embrace this integrated experience and continue with that same mindset throughout.

One effective way to bring car buyers and dealers to a shared perspective and bolster transparency is by digitizing the financing experience. But it takes more than just technology—it’s a new way of working.

The tools to tie it all together

Going digical may call for resources that aren’t in many dealers’ toolkits, either personally or institutionally. In 2015, we helped put the power of transparency in car buyers hands by launching Capital One Auto Navigator. Now, we introduced Capital One Navigator Platform , a digital tool that builds on Capital One’s existing products—such as Auto Navigator—with new capabilities that allow dealers to connect with more buyers, and help them during the vehicle purchase.

Navigator Platform enables car buyers to build the offer, using real rates and payments, that best fits their financial situation. Leveraging our technology, combined with lender partnerships, Capital One can get pre-qualification for the majority of applicants. At the same time, Navigator Platform allows dealers to understand consumer’s buying preferences before they come into a dealership. Ultimately, this helps dealers deliver a personalized car buying experience for each customer.

It’s important to remember that car buying is an experience, and it’s an emotional one. Trust is a significant emotion in that process. For dealers to embrace and build on that trust and translate it into more positive relationships, it’s a process to:

● Help dealers understand their impact and the opportunity they have to build trust from the information and support they offer.

● Increase transparency to build trust.

● Turn to new and enhanced digital tools that enable their customers to research, shop and finance as a way to build transparency.

● Embrace “digical” as a way of doing business. Integrating the digital and physical elements of car buying.

A partner in your pursuit

At Capital One, we have long believed dealers were integral parts of the car buying process. One of the ways we work to stand apart is that we include dealers in our view of this experience alongside car buyers. Dealers have always played an incredibly important role in the car buying and ownership process. Going forward, dealers' roles will continue to be critical for a positive experience, and the industry needs to offer dealers support as it evolves. Dealers need tools that help them lean in to build trust, increase transparency and empower buyers throughout the process.

Some in the auto industry believe in a world without car dealers—but my vision is the opposite. I want to help more dealers carry out their work, and help more car buyers appreciate the experience of achieving car ownership. When everyone can use tools to work toward that goal, we’ll open more doors that people can walk through—virtual and physical—and we’ll put more keys in happier hands.

Sanjiv Yajnik is President of Financial Services at Capital One.