Where is the retail auto industry going?
If you’ve been paying attention to the retail car industry in the last few years, you will have observed that the times they are a changin’.
New forms of vehicle motive power (electric, hybrid-electric, and hydrogen), greater gender quality in management and ownership positions, and sophisticated methods of connecting with customers and prospects (Google, Facebook, telematics) have transformed new car dealerships into thriving enterprises in the new economy.
As the winds of change sweep through dealerships across Canada, it begs the question: What will the future of auto retailing look like?
According to Larry Lantz, president of the Trillium Automobile Dealers Association (TADA) and president of Hanover Honda, that depends on dealers’ ability to adapt to change.
“Automotive retail is shifting from a productdriven to a customer-centric approach to drive customer loyalty and to adapt to new customer behaviour and expectations,” says Lantz. “As long as dealerships continue to embrace new technologies, commit to continuous improvement, and give customers what they want and expect, they will have a bright future.”
Lantz believes that rumours of the demise of dealerships are greatly exaggerated.
“In the early 2000s, the internet was supposed to spell the end of automotive salespeople, but that didn’t happen,” he says.
“Over time, salespeople embraced the internet and mobile technologies to their advantage and, today, they play an important role within a dealership.”
Like many industries, the retail auto industry is facing a wave of new developments and innovations that are influencing their businesses, including consolidation, hiring and retaining staff, competition, and new technologies. However, if the past is any indication, dealerships have weathered enormous social and industry shifts before and are not averse to change.
In the 1980s, in response in part to increased competition, auto manufacturers and dealers introduced new design features, standardized architectural elements and new customer-driven services (drive-through service bays, shuttle service, comfortable lounges with free coffee and Wi-Fi). Eventually, these changes helped to revolutionize the retail automotive experience.
One of the objectives in dealership rebranding efforts was to provide a more improved carbuying experience for customers, and it worked.
Customer Service Index (CSI) surveys, introduced in the 1980s, became an integral tool for measuring customers’ satisfaction within all areas of a dealership. Indeed, better CSI scores have led to increased customer satisfaction levels over the past three decades.
More recently, dealerships have embraced new technologies and remained relevant in the digital age.
No single point of contact provides more brand-specific products, services and expertise than a dealership. As vehicles become more complex, they require specialized tools, training and knowledge (provided by the manufacturer) to properly diagnose and fix problems.
Telematics (the transmission of computerized information) is one example where technology is helping dealerships run their businesses more efficiently. Dealerships are using telematics to manage their inventory, remotely monitor a vehicle’s mechanical condition, predict what service work it needs and schedule service visits (via a smartphone).
Staying connected using telematics provides greater value for customers, and helps to strengthen all-important relationships between customers and dealerships.
What will electric and autonomous vehicles, and ride sharing, mean for the future of automotive retailing?
“Yes, new forms of motive power and ownership experiences are intriguing and attention-grabbing,” says Todd Bourgon, executive director of the TADA.
“But we need to maintain perspective about these developments: First, EVs still represent less than one per cent of sales in Ontario, and mass adoption could be a decade away, or longer.”
Ultimately, the market will dictate how popular these technologies get.
“Secondly, EVs and autonomous vehicles - as impressive as those technologies are - still have to be bought and serviced somewhere, and new car dealerships will fulfil that role going forward. Dealerships have an impressive history of retooling and revamping their business models to meet new customer expectations, and that trend will continue.”
Many working in the retail auto industry today would agree that this is a golden age, and that career and advancement opportunities in this sector have never been greater.
“This is an exciting time to be in the retail automobile industry,” says Lantz.
“We’re in the midst of a massive reinvention of the role of transportation, and new car dealerships are playing a pivotal part in these developments. For anyone considering an exciting career in a fast-changing and dynamic industry, I would encourage them to explore the retail auto industry.”