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Promoting dealer-consumer alignment across continued industry evolution

Sponsored Content From Urban Science
This content was paid for by an advertiser and produced by the Automotive News Content Studio.
May 09, 2022 09:06 AM
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    Over the past two-and-a-half years, the auto industry and its dealers have been impacted by a series of disruptive forces that have created only one constant: change. From the pandemic and stay-at-home mandates that prevented in-store traffic, to chip shortages impacting new-vehicle inventory, and the shift toward digital retailing and electric vehicles, attention is focused on the directions in which the industry is going and how the dealer/customer dynamic will evolve.

    New Dealership Transformation Index to quantify changing auto-buyer attitudes over time

    To measure and deliver actionable insights related to the ever-evolving auto buyer/dealer dynamic, Urban Science® created its newly launched Dealership Transformation IndexTM(DTI). Fueled by a Harris Poll® survey conducted on behalf of Urban Science, the DTI provides a snapshot of the traditional dealer model’s relevance to today’s car buyers to help dealers improve alignment, and in turn, drive efficiency and profitability across sales and service operations.1  

    To aid dealers and OEMs in promoting dealer-consumer alignment that helps future-proof their businesses, the DTI measures auto-buyer perceptions – and spotlights critical risks and opportunities – across three key categories: 

    • Dealer Relevance seeks to better understand how consumers feel about the role of dealers, the expertise of salespeople and other aspects of the vehicle-buying journey. 
    • Cultural Resilience probes how open consumers are to buying a vehicle fully online, their perspectives on dealers’ abilities to sell and support an EV and their views on the importance of owning a personal vehicle. 
    • Actions examines what omnichannel steps/activities consumer are doing – or are considering – regarding their vehicle purchases, from visiting a dealership to submitting online quotes. 

    The inaugural index score sets a statistical baseline against which future data can be measured.

    DTI research methodology and key findings

    "Auto buyers are not completely convinced today’s dealers are relevant or putting in the effort to become so."


    To fuel the DTI, Urban Science surveyed auto buyers to gauge how they viewed the vehicle-buying process and the value of dealers within that process. On behalf of Urban Science, The Harris Poll also surveyed dealers to compare responses and uncover contrasts and opportunities. Although findings from the initial report indicate misalignment between the perceptions of auto buyers and dealers on several key issues, one key takeaway stands out: auto buyers are not completely convinced today’s dealers are relevant or are putting in the effort to become so.

    Dealer relevance: auto buyers and dealers have differing perspectives

    The gap between auto buyers’ collective perception of dealer relevance and dealers’ collective perception of their own relevance is one that needs to be monitored and tapped to refine dealership operations over time.

    Data from our study shows that only 50% of dealers surveyed strongly agree the traditional dealership format is optimized for the future. When asked the same question, only 30% of auto buyers strongly agreed – a 20-percentage-point difference. It remains to be seen where data from future studies will point, but with 44% of auto buyers strongly agreeing that “overall, dealers play an essential role in the new car buying journey,” there is reason to be optimistic. 

    Numbers and gap differentials don't tell the complete story. That’s why understanding the perceived effectiveness of the traditional dealership format in a market with new demands and changing buyer perceptions is so critical.

    How OEMs and dealers capitalize on new learnings and react to changing buyer perceptions will determine their relevance and future. Dealers and OEMs that create relevant, convenient, and future-proof brand experiences for their customers will be best positioned for efficiency and profitability as the industry moves forward – especially with its collective, continued journey toward electrification.

    Consumers and dealers both expect big changes – driven by EVs

    "“It’s expected there will be 134 EV models on sale in the U.S. by 2024 – more than double of what’s available today."


    Consumers recognize that EVs have the greatest potential to change the industry.2  Of concern is the fact that 1 in 3 auto buyers believe “dealers are behind the curve on understanding and advising the marketplace on EVs.” Dealers are on the same page and show humility when it comes to their own ability to advise on electric vehicles, with 45% saying that they are lagging behind.3  At this stage we understand that EVs are not for everyone, but the ability to anticipate where EV demand is likely to grow, through a detailed EV sales forecast, will help brands and dealers evolve with customer needs to more effectively target marketing efforts where they will have the most impact.

    With EVs, familiarity breeds interest

    Over the past three years, consumer opinions on the potential of electric vehicles to change the future of the auto industry has increased nearly 21% (over 9 percentage points). And it’s no wonder why. It’s expected there will be 134 EV models on sale in the U.S. by 2024 – more than double what’s available today.4  

    At the same time, an Ipsos Mobility Navigator Study reveals that since 2018, interest in battery electric vehicles has tripled, with over a third of U.S. consumers now willing to consider a battery electric vehicle.5  

    The most encouraging finding for automakers and dealers is that interest in battery-electric vehicles increases 3x as consumers gain physical familiarity with the model 7. The rallying cry of bygone automotive selling days rings especially true regarding being successful in electric vehicles: get butts in seats. 

    Education is Key. 

    Herein lies the conundrum: knowledgeable consumers are far more likely to consider an EV, but only 41% of auto buyers believe dealers are prepared and able to advise them on EVs. In an age where the consumer has more access to information, and does more research online before making a purchase, dealers must be prepared and become experts in the EV space to properly advise consumers and make them comfortable with the proposition of purchasing an electric vehicle. Knowing which dealers will experience the growing demand for EVs and when they will experience it can help them to prepare and prioritize investments in staff education, training, facility upgrades and targeted customer marketing efforts.

    Targeted incentives stimulate consideration at relatively low costs

    Auto-buyer sentiment is clear: incentives are an effective means of getting consumers to move into the EV purchase funnel by way of test-drives. This is important information, as test-drives increase familiarity and ultimately increase the likelihood of an EV purchase. That’s why leading dealerships continue to tap the power of targeted incentives to drive traffic – not only to their showrooms to make their EV and ICE sales and marketing efforts more efficient and effective, but also to service lanes to ensure their shops are creating service loyalty that enhances profitability and leads to new sales in the future. 

    Furthermore, our data reveals incentives needn’t be big to be successful. Relatively small incentives can be highly effective in motivating auto buyers to act 6.  It’s interesting to note that, while 73% of people would be motivated to act when offered a $35 incentive, the number of potential buyers who would be more motivated by a $250 offer only goes up by 5 percentage-points (78%). 
     
    Creating a comfortable EV consumer experience is imperative. Dealerships with targeted cash EV test drive incentives, charged and ready to go EVs and an educated sales team will be the dealers best positioned for success.

    Finding and capitalizing on EV demand

    It is essential that OEMs have a good understanding of where demand for EVs is going to rise. Being able to predict where their EV efforts are best suited and which dealerships will experience the most customer interest is key. Urban Science’s EV forecasting capabilities give OEMs the ability to better understand who will be impacted – and when – and can help to give key insights into how to best prepare. 

    "By understanding where the rise of EVs is imminent, we can start empowering dealers by showing them the amount of potential in their localized territories for EVs and which types of vehicles are most likely to be sold in terms of segment preferences," said Simon Bradley, global practice director, network, Urban Science. "This valuable foresight can help prioritize dealer preparation, calibrate local consumer awareness programs and ensure charging support in anticipation of EV sales for a smooth well-timed transition."

    As we move towards the EV future, the consumer-dealer relationship will continue to evolve, and opportunities will be plentiful for both OEMs and dealers.

    Opportunities for OEMs

    • Understand where and when EV demand is likely to rise geographically and ensure your network is prepared to capture the opportunity
    • Empower dealers to understand evolving local EV segment preferences, opportunity and how volume/market share will grow
    • Use location intelligence to raise consumer awareness and make it easy for them to experience an EV
    • Invest in education for both dealers and consumers

    Opportunities for dealers

    • Getting consumers to experience EVs firsthand is essential; consider doubling down on test-drive targeted incentives
    • Take advantage of OEM education programs
    • Empower your customers with holistic knowledge of EV ownership; cost, charging and aftersales care

    Tap the power of science – and certainty

    Since its founding over four decades ago, Urban Science has continued to enhance its proven, scientific approach for engaging, motivating and supporting customers and dealers. It’s an approach that stays ahead of the technological curve and continues to be the industry standard. 

    Look for more articles in this series in the coming weeks relating to Service, Digital Retailing, Retail formats, Consumer buying trends and Driving Traffic. For more information, visit www.urbanscience.com/DTI.

    _____________  

    1 This survey was conducted online by The Harris Poll on behalf of Urban Science among 1500 US adults aged 18+ who currently own or lease or plan to purchase or lease a new or used vehicle in the next 12 months. The survey was conducted from December 23, 2021, to January 4, 2022. Data are weighted where necessary by age, gender, race/ethnicity, region, education, marital status, household size, employment, and household income and propensity to be online to bring them in line with their actual proportions in the population. No estimates of theoretical sampling error can be calculated. 
    2 sup>2“Measuring consumer-dealer alignment across continued industry evolution,” April 2022, https://www.urbanscience.com/insightlab/dealershiptransformationindex/
    3 “Dealers Show Humility When it Comes to Their Own Ability to Advise on Electric Vehicles,” Urban Science Online Dealer Study, January 2022. This survey was conducted online by The Harris Poll on behalf of Urban Science among 250 U.S. OEM automotive dealers, whose titles were Sales Manager, General Manager, or Principal/VP/Owner. The survey was conducted from December 23, 2021, to January 26, 2022. Results were not weighted and are only representative of those who completed the survey. No estimates of theoretical sampling error can be calculated. 
    4 “The Number of EV Models will Double by 2024,” https://www.visualcapitalist.com/the-number-of-ev-models-will-double-by-2024/ 
    5 “Interest in Electric Vehicles Has Tripled. How Can Automakers Take Advantage?” https://www.ipsos.com/en-us/news-polls/Interest-in-electric-vehicles-has-tripled-How-can-automakers-take-advantage  

    6 “Measuring consumer-dealer alignment across continued industry evolution,” April 2022, https://www.urbanscience.com/insightlab/dealershiptransformationindex/
    7 ”JD Power Suggest Outreach and Education to Build EV Demand,” https://insideevs.com/news/504167/jd-power-ev-demand-education/

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        • Easycare: The importance of benchmarking your reinsurance performance
        • Effectv: Why “Customer Lifetime Value” Should Be the Auto Advertising Buzz Word for 2023
        • Experian, GroundfTruth and Spectrum Reach: Dealership marketing: Navigating automotive advertising in a post-pandemic world
        • Experian: Evolving identity beyond the “who” to enable the “how”
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        • Haig Partners: Buy-Sell Q&A: Where the Automotive M&A Market is heading
        • Haig: Buy-Sell Q&A | Navigating partial dealership sales
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        • Truist: Prepare now for the next era of automotive retailing
        • Urban Science: Promoting dealer-consumer alignment across continued industry evolution
        • Walbridge: Video | Walbridge Chairman on how automotive companies are navigating the electrification boom
        • Western Digital: To Meet Consumer Demand, Automakers Must Double Down on Agile Development
        • Wipro: How to address safety and security for software-defined vehicles
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        • Wipro: Video | Wipro CTO on how OEM's are leveraging software-defined vehicle technology
        • Notarize: What to expect for the future of auto sales
        • Seagate: Unlocking value from connected-car data
        • Amazon Web Services: AI-powered supply chain decision-making
        • Epic Games: Five ways in-car designs will change in the next five years
        • Haig Partners: How are dealerships being valued today?
        • Haig Partners: Dealership consolidation trends
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        • Ally: Navigating the future of automotive retailing
        • Google: How a century-old brand is transforming the auto industry
        • Car Wars: Is a Rise in Service Leading to Poor Customer Satisfaction?
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        • Kerrigan Advisors: Blue Sky Update Q4 2021
        • Qualcomm: Trading multi-year design cycles for on-demand features and experiences
        • Twitter: EV adoption is happening...in an unexpected place
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