6/26/2020 | 1 MINUTE READ

Car Dealers Embrace the Online World

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Moving the sales process online is a hit—and a new competitive advantage

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Car dealers wasted no time expanding their online presence when coronavirus lockdowns began in the U.S. March. Now, there may be no going back.

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By April, four out of five dealers had moved beyond their physical showrooms by pushing more of the sales process online, according to Cox Automotive. In May, digitally submitted sales from dealers soared more than sixfold.

Since then, three in five consumers report that their online buying experience was better than the traditional showroom process, according to Cox analysts Michelle Krebs.

“Consumers had been waiting for this and preferred it when they got it,” she concludes. From now on, Krebs adds, dealers who continue to offer online options will enjoy a “clear competitive advantage” over those who don’t.

They’ll need every edge they can find this summer.

Cruel Summer?

Last year, sales of light vehicles in the U.S. totaled 17.1 million. Deliveries were humming along about the same pace in January-February. But coronavirus lockdowns in many states caused the annualized rate to plunge to 9 million in April.

As states eased restrictions, the annualized sales pace bounced back to 12.2 million units in May. The rate climbed to 12.6 million this month—still about 30% below the pace at this time last year, according to Cox.

Cox says full-year volume in 2020 will total only 12.9 million, down 25%, thanks to what it describes as a “cruel summer” for dealers.

“The auto market will have some major obstacles over the summer that will slow the V-shaped rebound we had all hoped for,” Cox cautions.

Speed Bumps

One hurdle is a growing shortage of inventory as reviving demand gets ahead of the output of just-reopened assembly plants.

Cox notes that shoppers may not find the color and trim combinations they want. Some will buy anyway or see what they can find on another brand’s lot.

Other buyers will hold off. Some are just willing to wait to get exactly what they want. But about one-third of pending buyers in mid-June told Cox researchers they were balking because of worries about civil unrest, shaky economic conditions and an uncertain employment outlook.

Bottom Line

Consumers already have plenty to be nervous about. Reports over the past week about upswings in regional COVID-19 cases sure aren’t helping.

These issues will go away, but it won’t happen overnight. In the meantime, stand by for a shaky—if not cruel—summer.

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