I frequently talk about the current industry disrupters taking sales from dealers – the Beepis, Vrooms and Carvanas, amongst others. These companies snuck up on dealers and, with little warning, jumped into the spotlight and sucked investors into a future Nirvana of car buying bliss. They are currently blasting feel good messages to consumers portraying car dealerships as inconvenient — pushing a message of an easy buying experiences which, unsurprisingly, consumers (and investors) have eaten up.
While they may not have yet gained much market share, their strength lies in one simple fact: the message they broadcast to consumers is effective. We have the technology to sell cars in the exact same way and deliver the exact same experience. Yet, deserved or not, sadly, dealers have a perception issue with consumers. So, who do you think consumers will believe first? You got it.
What we have yet to talk about is who the future disruptors will be. We can’t prepare ourselves if we’re not constantly looking on the horizon. Well, guess what? The horizon is staring us right in the face and if you thought Carvana, Beepi and Vroom were scary. These will give you a heart attack!
Google. Apple. Microsoft.
Any one of those entering the automotive industry would be a powerhouse — but all three?
You may discount their efforts with arguments such as, “it will be a long time.” Or, “it will just be autonomous cars,” (which nobody wants). Or, a number of other excuses to ignore them. However, the fact is that these companies did not get to be industry giants by making things people don’t want. Remember the iPhone? When Apple first developed it, all of the other phone manufacturers predicted a flop. Well, we know how that went!
Let’s take a look at some of the recent events that have occurred with these companies:
- Google: Google is already testing driverless cars and have partnered with OEMs to assist in their manufacture. The company even plans to open a facility in Detroit to be near their “partners.”
- Microsoft: While Microsoft recently said that they were not personally entering the automobile business, they expressed their support and encouragement for other companies to do so and have offered to assist automakers.
- Apple: Probably one of the worst kept secrets is the Apple Car. Of course, Apple denies that one is in the making — all while hiring automotive-related experts, investigating charging stations and filing patents that would suggest otherwise.
Two of these tech giants – Apple and Google – are already fortifying their positions within the industry through the integration of their software via Apple’s CarPlay and Google’s Android Auto.
While Apple is notorious for being uber-protective of its operating system, with the popularity of iPhones and consumer demand for integration, automakers are adopting and installing this technology into vehicles. Apple will decide what features, updates and apps will be allowed and automakers are already seeing a loss of control of their own vehicles.
And we can’t forget Tesla, who are already fighting tooth and nail for its direct-to-consumer sales model. And in some places… winning. Now they’ve partnered with Nordstrom to build showrooms within Nordstrom locations!
Why throw Tesla into this mix? Do you really think that Apple or Google are going to start car franchises? Could they perhaps be waiting patiently, allowing Tesla to fight the battle over direct-to-consumer sales so that their path is clear when vehicles are ready to be sold? Let’s just say you won’t ever be seeing a Google or Apple car sitting on a FCA dealership lot.
So, we can sit back and dismiss the current companies disrupting our industry, taking sales and winning customers with easy online buying experiences. And, we can also ignore the threat to come from tech giants with deep pockets who, I guarantee, have no plans to lose in this market place. Or, we can take action now to stem the bleeding and take back what is ours by using the very same tactics that they’re using to win our customers while making sure our eyes are open to future threats that are certain to come.
Automotive Online Retailing (ARO) is just now gaining inroads into the retail automotive space. And it is important to recognize that. We do not have to challenge or reduce our margins. As a matter of fact, we can gain margins. Customers will buy more, and they will buy more often, if their confidence is high and if their experience is pleasurable. Enough facts and research studies have been released to prove that.
We simply must gain consumer confidence and smooth out our processes while protecting our margins. For the majority, I promise you it is all about the process, the ease and simplicity, the transparency, the relationship and the enjoyment.
I write this article simply to offer you a look into a potential future. There is no doubt these tech giants have earned consumer confidence and, if they follow Tesla’s lead with their autonomous cars, our OEM’s and our dealer brothers and sisters will have their hands full.
I say “start now!” The future is clear and consumer demand is overwhelming. We can become better dealers in a myriad of ways. We can and must earn consumer confidence. I talk with Owners and GM’s coast to coast and know that dealers are making record profits today, and that is wonderful.
However, I specialize in peaking around corners and searching for trends with teeth. ARO is here to stay and the Amazon-like or Apple in store experience should be our goal as dealers — along with becoming more efficient — and yes, even more profitable. Have you seen the profits these tech giants make?
Enjoy your record breaking profits today. But know….this too will pass. Prepare for the inevitable.
Author: Joe Orr
Joe Orr, former General Manager of Dick Hannah Honda, and automotive retail veteran of 35 years, entrepreneur and visionary. Left a 25 year job to take Online Deal Creation coast to coast as CEO of Virtual Deal. Joe is always on the forefront of new technology and is a driving force in progressive digital initiatives and a strong advocate for winning dealership solutions of all flavors. He will tell it straight and in dealer talk.