A Living Lab for our Future

During several presentations at the NADA convention a valid question kept on coming up. What dealers will be like in ten years from now?

The digital revolution will bring a separation between sales and service as there will be no need for a sales floor and inventory in hand. A delivery point will be all that is needed and that , depending on the brands , can be turned into an experience in itself . Having inventory means tying up investment in vehicles, a physical lot and maintenance of all of these. Virtual reality eliminates all of that and lets the customer see and choose all the options from home or office. We in fact are already doing this with Amazon purchases. We buy and expect the product to arrive days later. Cars and trucks will be the same. The transition is already taking place in China and Europe. In the United States dealers are protected under franchise laws that don’t allow a manufacturer to sell cars direct, but that could change in a decade from pressure from the Tesla, Sony, and Apple like new vehicle manufacturers. Luxury car brands will turn their dealerships into experience centers, while others will focus on minimizing the cost of delivery to give better value to its customers. Commercial trucks may be contracted for specifics moves and returned. It seems that ownership may not be a benefit anymore for the next generation of consumers and businesses.

Search-based marketing will dominate the sales environment and historical data will automatically create packages for the customer to authorize the contract. Finance sources will be integrated with the dealers and AI (artificial intelligence) will generate and process the digital documents needed via Blockchain to release the vehicle to the owner at a location of their choice.

All this tech is already available and we are in the process of integrating it now. The speed, accuracy , simplicity, and adoption of it will have a huge impact on the sales and finance personnel. With this, the “talent” crisis of finding good sales people goes away. A hand shake may still be needed, but that could come straight from the GM of the store. The B2B sector will grow with a preference to stay away from “ownership” (and it’s related maintenance issues) and emphasis on the latest mobility tech integration as it relates to it’s specific cargo.

The rapid advances in technology are causing unprecedented changes across all types of dealerships. I read somewhere that all sales start and end with people. And I believe that is correct. Except that the “human” element now may be the person assisting the buyer with the sourcing-buying technology and not the sale per se. The pandemic has shown that digital technology works. So dealers will need to accelerate the adoption of these “new” tools. The crisis also helped to isolate areas of a dealership that represent a cash drain and these pointed to flooring, personnel , and infrastructure cost. A NADA study showed that the return on investment from sales stores upgrades was almost zero. As an example Polestar/Volvo new dealer initiative call for spaces of 2,000 sq ft with no inventory. So minimizing these portions of the business and using tech are just logical progressions.

The full impact of the pandemic will not be clear for a while, but in less than a year advance tech integration at a dealership showed that has a lot of potential. For a dealer to succeed it will need to develop a new business plan based on more use of high tech and analytics integration than what we have done for the last 10 years.