Car Dealerships: Behind, Ahead or on Their Way Out?

Changing Markets, Changing Attitudes

When a character from television’s Mad Men bought a new car, it was more than just transportation. Boomers bought wheels that made statements. Today’s consumers care more about gas mileage. Millennials are practical and thrifty, they do their research before buying, and they aren’t always impressed by size and brand.

They have access to non-traditional taxi services too. Uber rivals both Ford and GM with a $50 billion valuation. Families can save money by not relying on a second car, and they can do it without sacrificing convenience. A slow but steady evolution in generational attitudes results in far fewer trips to the local car dealership.

Autonomous Automobile Automation

According to the Wall Street Journal, monthly U.S. car sales topped 1.5 million this past May. While it sounds like lot of deal closing, that number is down 6 percent from last year’s figures. Are we all holding out for robotic automobiles? You’d think so according to recent media reports. The stories rival sci-fi, but who’s really behind all the buzz?

Give credit to the automobile industry for revving up our expectations about driverless cars. Dealerships don’t have showroom models yet, but they’re counting on corporate marketing to keep us excited. Ten years from now, today’s amazing automated innovations will probably seem as ordinary as center stripes on the highway.

Online Game Changers

Did you pick up quality auto parts online last year? Do you have favorite shopping sites for tools, clothes or clocks? If you purchased anything off the Internet, you helped contribute to more than $340 billion in online sales. That number is even more impressive when you consider that it represents a 14 percent increase over 2014 figures.

Would you buy a car online? That question is even more amazing when you realize that it’s possible. Sites like Carvana and Beepi are putting a big dent in the traditional used-car game. For shoppers who don’t like haggling and don’t mind not kicking the tires, these online outlets are a big draw away from traditional dealerships.

A Little Legal Limbo

The laws vary from state to state, but generally they restrict online sites from offering new cars. The services are supposed to act as middlemen between sellers and buyers, but auto dealerships in California filed a lawsuit last year that exposes numerous shades of gray in the industry. Regardless of how the suit is settled, it shines a bright light into a corner of the Internet that storefront car dealerships can’t afford to ignore.

Most dealer franchise laws prohibit manufacturers from selling cars directly to you. That’s where the dealership fits in, but online sales add a currently undetermined dimension to car sales. There are third-party sites that direct customers to brick-and-mortar locations, and then there’s Tesla Motors. The company only sells through its own storefronts and bypasses the dealership model altogether. Competition is tough online, down the street and in the courts.

Staying On Top and Ahead

Do a quick search for car dealerships in your area, and take a look at their online offerings. Whether it’s a local sales operation or part of a national brand, the company knows that it has to stay on top of technology to win your business. You can price different models, post your contact information and get a call back from a company’s Internet Sales Division in just a few minutes.

Auto dealerships get it. Their own industry studies indicate that more than 80 percent of consumers start their car-buying experience with an Internet search. That means you can line up a test drive online, shop around for negotiation-free pricing and still avoid dealing with salesmen. Keeping you happy keeps dealerships ahead of the game.

Riding Into the Future

The industry is getting better at navigating curves on the digital highways. They reach out to you through company websites and stay in touch with social media while they tweak online sales strategies.

Marketing, negotiating and delivery systems will certainly be modified, but the sale will always come down to two people. Whether they seal the deal with a handshake on the showroom floor or through the email box remains to be seen. It will probably be a little bit of both, but just like that earlier switch from legs to wheels, changes will happen, and smart car dealerships will ride them into the future.