By Desiree Homer
The numbers are coming in, and it’s no secret that dealers nationwide have been forced to limit or halt their in-person engagements altogether. In the face of the statewide executive orders to shelter in place, retailers took to the web. They began connecting with their local communities and car buying audiences via face time, digital vehicle walkarounds, and social media. Many dealer owners are embracing the e-retailing model for the first time. Before the outbreak, only about 15% of transactions were completed online. In a NADA survey of over 500 dealers, online car sales are expected to more than double over the next five years. Once the nation is able to emerge from this temporary isolation movement, consumers may still want to proceed with social distancing caution, and dealers need to be ready to adopt the digital commerce strategies for good.
How the Pandemic Is Affecting the Numbers
According to J.D. Power, vehicle buying demand dropped 13% within the first 19 days of the month. In specific markets hardest hit by the viral outbreak, like Seattle, Chicago, and Los Angeles, the demand tanked by 22%. Moody’s Analytics is projecting a year-end drop of 20% from 2019 sales and suggests this drop could be felt well into 2021. Dealers are feeling these declines and, with an undetermined timeline to recovery, are also feeling a familiar uncertainty.
This kind of slump and data is eerily similar to the 2008 crisis, according to an Evercore ISI survey of 40 dealers. The big difference between the two economic impacts lies in the cause. The economy wasn’t performing well in 2008, which led to the financial fallout. In contrast, the 2020 economy began strong and, prior to the virus, was on a trajectory to be one of the healthiest years on record. While the numbers for 1Q and March see declines, dealers can take solace in knowing the rebound is coming, and the experts predict a strong economy on the other side.
Encouraging Digital Data
Some numbers indicate the car buying demand is merely in hibernation, and not dissolved altogether. While the showroom traffic has come to a grinding halt, online traffic for 1,000 dealers in the U.S. and Canada currently partnered with Roadster, jumped six percent. Roadster, a digital sales platform vendor, partners with dealerships to develop retail commerce solutions from financing paperwork to vehicle delivery. Consumers continue to engage digitally, even during these uncertain times. It’s a strong indication that the pulse of the American car buyer is steady, and when allowed to return to the market, will do so in a big way.
Life After the Coronavirus Outbreak
Experts suggest that this pandemic will have lasting effects on consumer shopping preferences, long after the danger subsides. Many consumers will return to their normal habits in the months and years to come, but most may proceed with caution. Social distancing may not be mandatory, but those living through these tumultuous times will not easily forget and could adjust how they engage companies and buy cars in the future. Dealers should be ready for the sales and service landscape post-COVID-19. The digital retailing that may have only been a partial segment of your business might need to be the primary pillar of your strategy. As dealers are forced to embrace online engagements today, it can help them to develop long-term efforts that may become more mainstream tomorrow.
Tesla and Carvana tested the entirely online car buying platforms first, but dealers are learning to embrace the digital retailing space, too, during these government-imposed shut-ins. In the months ahead, it could be the preferred method for consumers, and adopting e-retail strategies now can ensure sales down the road for your store.