Proof the Dealership Experience Needs a Major Overhaul
It probably comes as no surprise to most people, but a study released this week by Autotrader found that the current car buying process is almost unanimously unsatisfactory. Consumers are especially looking for changes in test drives, how deals are structured, the financing paperwork, and having their vehicles serviced. While the study points out areas that need change, the Autotrader study also includes suggestions and changes that dealers can make to improve the experience for their customers instead of just focusing on the negatives.
“While there is good work going on right now to adapt decades-old sales processes, consumers are telling us that we as an industry are not moving fast enough,” said Jared Rowe, president of Autotrader. “By recognizing — and embracing — the need for change, we have a tremendous opportunity to surprise and delight our consumers.”
Considering the numbers, those changes are desperately needed. Out of the 4,002 car shoppers and buyers surveyed, only 17 of them claimed to prefer the current system. Seventeen out of 4,002 comes out to less than half of 1%, meaning that more than 99.5% of all car shoppers and buyers in this study were unhappy with the experience that they had. With such low satisfaction, making changes in the four main areas that Autotrader found is an important step for dealers who don’t want to be left behind.
The study found that 88% of shoppers refuse to buy a car without test driving it first, making the test drive a necessary step for dealers to get right. The majority of people were dissatisfied with their test drive, though, saying they didn’t enjoy being accompanied by a salesperson. Instead, they would prefer less pressure and more convenience, especially the convenience of being able to test drive multiple vehicles from different brands at the same location. Additionally, while they didn’t like the pressure of having a salesperson accompany them on test drives, shoppers did like the idea of being able to talk to a product specialist who could answer their questions.
When it comes to negotiating the price, as Autotrader rightly points out, that’s an aspect of buying a car that’s unlikely to disappear anytime soon. While consumers know this, they would like to see changes to the way deals are made. Playing games, pulling different versions of the bait and switch, charging excessive fees, and adding absurd dealer markups to limited models is no way to retain customers these days. Instead, reaching a deal entirely online is becoming increasingly popular, with many shoppers wanting to be able to be the ones to begin the negotiations on their own terms and without having to give away a lot of personal information beforehand.
One of the most lengthy aspects of buying a car is negotiating financing. A separate study found that the average time spent on this part of the process is just over an hour, which customers would like to see significantly shortened. Seventy-two percent of customers wanted to be able to complete the credit application and paperwork on the Internet. Not only do they want to save time in the process, they want to be able to do so in an environment where they feel less pressure. With less total time spent at the dealership and less pressure during that time, customers are more likely to end up having a positive experience.
Finally, the service could use improvement as well. The vast majority of customers would like to be able to service their cars through a network of local service centers, not just at the dealership, while still seeing their initial service agreements honored. This is mostly for convenience, since a lot of people don’t have a dealer close by and have to drive significantly out of their way to have their cars serviced.
The study also found that a better dealership experience doesn’t just benefit the customers; it benefits the dealerships, too. Nearly three quarters of shoppers said that they would visit the dealership more often if the buying process was less inconvenient, while two thirds said when buying their next car, they would be much more likely to return to a dealership that offered them their preferred experience. Finally, more than half said that they would buy new cars more frequently if the dealership experience was improved.
A number of commonly held beliefs about car buying were found to not necessarily be true. For example, with comparison shopping on the Internet and more transparent pricing becoming commonplace, a lot of people think that salespeople are on their way to becoming irrelevant. Eighty-four percent of consumers said that they want to buy a car in person, though, and 43% said that they see dealerships as places to learn. They still want to be able to verify what they find online, as well as learn about specials, offers, warranties, and vehicle service. The role of the salesperson may be changing, but they’re still important to the car buying process.
The idea that car shoppers don’t want to negotiate is also not entirely true. More than half still prefer to negotiate the price of their car versus paying a fixed price, and that included both women and millennials, two groups often thought to be the least interested in negotiation. Those findings are not necessarily because people love negotiating, but rather because they don’t yet trust that fixed prices are fair prices and still believe that they have to negotiate to get a good deal. As customers begin to put more faith in flat pricing, their commitment to negotiating will likely go down.
Price is also not necessarily the most important factor. Fifty-four percent of shoppers said that they would buy from a dealership that offered their preferred experience over one that offered the lowest price, while 73% said they were willing to drive farther to find a great salesperson. Only 65%, on the other hand, said they would drive farther to get a lower price. Pricing is still important, but as customers become less satisfied with their experiences, it appears that many are deciding that suffering through a bad experience isn’t worth the little money they could save.
The overwhelming dissatisfaction that Autotrader found with the car buying process may come as a surprise to a number of car dealers, like the Texas Automotive Dealers Association, that recently launched an anti-Tesla website claiming, “The Texas franchised dealer system protects consumers and prevents monopolies through competition on motor vehicle sales and service,” and, “The motor vehicle franchised dealer system in Texas creates a level playing field so that there is fierce competition on price and service amongst dealers, and there is consumer protection afforded to the buyer over the lifetime of the vehicle.”
Clearly those dealers believe that they protect consumers and that competition between dealers is enough to lower prices and improve service for customers. On the contrary, Ezra Dyer’s “An Open Letter to Tesla, From Your Friendly Local Car Dealers” is a brilliant satire piece that takes a much more cynical view of dealers and the current car buying process. Dyer hits hardest with the lines, “Now, you may enjoy selling your cars with no middleman and just keeping all the money. But I ask, have you considered letting us have some of that money? It is our position that we would like some of the money.”
Customers aren’t entirely opposed to dealerships. What they don’t like is the dealership experience. While car shoppers haven’t had the opportunity to use an alternative until recently, disruptors like Tesla are showing that making the experience enjoyable for customers can be incredibly beneficial to businesses. Changing that experience doesn’t necessarily require the elimination of the dealership model, but dealers are going to have to recognize that there are major problems that need to be addressed.
Hopefully dealers will look at feedback like the kind offered by this Autotrader study and see it as an opportunity to improve their businesses. Especially considering people’s desires to test drive competing brands at the same location, the dealership model will likely stay around for a long time, but only those who are willing to adapt will survive. Those that stick their heads in the sand — like the Texas Auto Dealers Association — in the face of overwhelming criticism, will soon find their customer base has dried up and moved on.
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