Digital Dealerships? What the Automotive Digital Transformation Means for Brick-And-Mortar Shops

The automotive industry has recently experienced powerful changes brought on by the digital revolution, shifting customer preferences, and a global pandemic. Established digital car sales platforms have seen huge growth over the last couple of years, and traditional franchises are racing to move their services online. Industry giants General Motors broke into the ecommerce space with the release of their ‘Shop-Click-Drive’ program. Similarly, Luxury car brand Lincoln is eager to digitize as they await the launch of their Effortless Sales Experience purchasing platform. In this blog, we’ll outline some of the major factors affecting the automotive digital transformation and what these advancements mean for traditional brick-and-mortar dealerships. 

Pandemic Pushes Car-Buying Online  

As COVID-19 surged through global communities in 2020, more consumers turned to digital sales outlets for their car purchasing needs. 

While the modern consumer is accustomed to scouring the web for the latest reviews, end-to-end digital car buying was still something of a novelty prior to the pandemic. But as strict stay-at-home orders placed the country on lockdown, more consumers embraced online car shopping. In fact, nearly 30% of all U.S. new car sales were completed online in 2020. 

Online car sales continued to rise into 2021, topping out at a revenue of $36 billion, and market size is  projected to grow more than 5% in 2022. What’s more, research indicates that 18% of auto shoppers would buy a vehicle sooner if there was an online purchase option.

Generation of Change 

For the first time, millennials have surpassed babyboomers in terms of car purchasing power. According to a recent study, millennials accounted for 38% of all new car sales in 2020and these customers don’t shop for cars like their parents. 

Studies show that this demographic is almost twice as likely to shop for and buy a vehicle online. Millennials are drawn to fast, seamless purchasing options and feel comfortable making large purchases online. For many, the idea of long showroom conversations and back-and-forth negotiations are enough to keep them away from dealerships. 

Younger generations are looking for a simplified purchasing process that still includes great customer service features. Millennial and Gen Z purchasing habits will be something for auto dealers to watch closely in the coming years. 

The Future of Dealerships 

Despite these many changes, traditional brick-and-mortar dealerships aren’t going anywhere soon. Even with the push for digital transactions and a younger clientele, customers still want anat least partiallyin person experience.

Customers are coming to dealerships to inspect and test-drive the vehicles they have spent so long researching. While they might be less inclined to talk with a sales-rep for hours, shoppers are more likely to come in ready to buy. Auto dealers should be prepared to assist empowered, well-informed car buyers. 

Apart from this, dealer service departments are thrivingaccording to the National Automobile Dealers Association, dealerships wrote more than 136 million repair orders, with service and parts sales totaling more than $60 billion in 2021. 

As discussed in our customer service blog, customers who regularly service their car at a dealership are 86 times more likely to purchase their next vehicle from the same dealership. If your shop can gain return car service customers, you have a good chance at securing that customer’s business for life.

Final Thoughts 

Change is inevitable. While the pandemic has driven changes to the automotive industry in challenging and sometimes unpredictable ways, the digital transformation presents incredible car sales opportunities.  

Dealerships can begin to embrace the technological shift by utilizing smart tools such as Elo GPS with CarRx. Elo’s inventory management software allows dealers to check the location and status of vehicles on the lot, ensuring an optimal test drive experience for customers. Plus, CarRx’s advanced tracking technology is designed to help your customers assess their vehicle service needs and book service at your dealership directly from their phone, so you can boost service business.   

To learn more about Elo GPS, schedule a demo with our team of industry experts.