Industry Focuses on Efficiency, Safety

By Jeff Bellant July 22, 2020

Industry leaders expressed confidence in the market, during a recent webinar, even as they expect the continued evolution of technology and car deals in the wake of the COVID-19.

Kerri Wise, TrueCar’s vice president of communications, discussed a recent survey the company conducted of more than 16,000 dealers.

 

TrueCar’s VP of communications Kerri Wise
TrueCar’s VP of communications Kerri Wise

Unsurprisingly, COVID-19 resulted in significant dips in shopping in March and April on TrueCar’s site, Wise said.

After surveying consumers right after the coronavirus hit in March – and then again in May – the surprising thing TrueCar learned is many consumers still had a need for a vehicle.

“About 70 percent of the consumers we talked to said their need for a vehicle stayed the same or even increased in some cases,” Wise said.

OEM incentives and dealer remote services helped to draw consumers back, Wise said.

In cities like New York and Chicago, some consumers had to buy a car because of their concerns about the safety of public transportation or rideshare.

Liza Borches, CEO, Carter Myers Automotive Group based in Charlottesville, Va., said demand did not slow down at their stores.

“We had such a great June,” she said. “There was some pent-up demand. Consumers are still in the market to purchase a vehicle.”

Demand increased and consumer confidence in June were both high, Borches said.


Repairs have kept many Dealers afloat
Repairs have kept many Dealers afloat during COVID-19

Mike Darrow, president & CEO, TrueCar, said the industry is meeting the challenges of the past several months.

“Dealers are leaning into the process and learning to evolve their processes,” he said.

Moving forward, following the May and June rebound for both new and used cars, the challenge is whether OEMs pick up quickly with production, Darrow said.

“We’re finding that some of the hotter models in new-car inventory are getting a little short,” he said. “I think dealers will be dealing with that throughout July.”

Darrow said his experience is that OEMs catch up quickly.

Brian Krzanich, president & CEO of CDK Global, a tech provider to the auto industry, said there are couple of things that are different in this economic downturn than previous ones.

“I think dealers were much better prepared this time,” Krzanich said. “They had their financial systems in order much better. Their (businesses) are just better managed than the last time there was a downturn.”

Krzanich and Darrrow saw dramatic declines in March and April regarding new-car sales, as much as 30- to 40 percent.

“The interesting thing is we saw repairs hold very well,” Krzanich said. “In some weeks and months, it was actually above normal.”

This kept dealers’ cash flow going, he said.

By June, there was a strong recovery. It was equal to or even slightly higher than previous years, Krzanich said.

“It was a nice recovery,” he said.

Krzanich said the technology going into dealership is going to increase, which may affect staffing.

Dealers are finding new ways to reach car buyers online
Dealers are finding new ways to reach car buyers online

Things like augmented or virtual reality – touring a car, sitting in a car virtually, changing options and colors online as a customer views a site– is something dealers are working with, Krzanich said.

That means more IT resources, he said.

“It’s going to be very hard, if not impossible, for one company to supply everything a dealer needs from a technology standpoint,” Krzanich said.

Web capabilities will be needed, from online purchasing and pricing capabilities, to menu and desking.

“You are going to need technical skills to put that together into a flow that you want to have,” Krzanich said.

Darrow agrees with Krzanich regarding the priority of technology going forward.

“I think you’ll see dealers lean into technology more and more,” he said. “The interesting part that we’re finding is that much of that technology exists already.”

He said TrueCar launched a texting platform recently for consumers to connect with retailers.

“We’ve seen a number of deals done completely over a text engagement,” Darrow said. “”We’ve seen salespeople taking their iPhones out onto the lot, doing an actual walkaround and sitting inside the vehicle and texting that to a consumer.”

As the coronavirus forces dealers to make changes, they will probably be things dealers should have already been doing, Darrow said.

Tesla dealers mobile services reduce contact
Tesla's mobile services reduce contact between staff and buyers

Concerns over safety have affected both consumers and dealers. Dealers have also adjusted to social distancing and other safety measures.

“That’s probably one of the biggest changes we’ll see through the rest of the year,” Darrow said, “the importance of scheduling appointments, managing traffic and managing flows through the dealerships.

“They seem to be prepared to meet consumer needs going forward.

“It all goes back to the fundamentals,” Krzanich said, “in doing as much of the transaction online as you can. People are coming in on a variety of websites, looking at options, pricing cars, getting their financing, etc.”

Krzanich said dealers have done a good job of touchless service, whether it’s dropping off cars or picking them up.

He added that dealers seem to be doing a great job of keeping cars clean after service or contact.

On the repair and service side, there may not be much a change in staff.

“But I think on the front end of dealerships, you’re going to need fewer salespeople, to be honest, as part of efficiencies,” Krzanich said. “I think a lot of the finance can move online, so that can become more efficient. But you’re going to want more technical resources to really help you drive the workflow you want to have as a dealer.”

Darrow expects a rebound in Q3 with strong consumer sentiment. With strong lease penetration over the past three years, it means strong lease returns should create retail demand for new cars as well as creating good used cars.

Darrow said there are unexpected tailwinds, too. In the TrueCar survey of consumers who bought using the site, it showed that 10 percent of those were new consumers coming into the buying process.

“We look for a big Q3 and Q4 to finish the year,” Darrow said.

Borches is also positive about the market overall.

“We‘re seeing lenders still ready to lend money. We’re not seeing any tightening in that area,” she said. “It’s boding well for what I think will be a good second half of 202

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Last modified on Wednesday, 22 July 2020 13:28

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