How car dealers can embrace digital disruption


Disruption usually starts with the idea that things can get better. A look at history shows that many of the technologies and innovations that have changed the world began with this belief.

However, in order to realize this potential, industries must take advantage of new advances and adapt to changes. When this is not the case, a disruption can have a negative impact until a market corrects. Businesses can avoid this by embracing technology and innovation and learning how to use them to their advantage.

Before 2020, no more than 2% of car sales were made online annually. It jumped above 30% during the lockdown and has continued with expectations of further increases. Several automakers have announced plans to sell certain models exclusively online. Others have stated that they aim for digital sales to be up to 50% of their business.

While the current state legislation is keeping traders at the table, the digital disruption is coming and traders have yet to adapt. Once technological disruption begins, it is inevitable. However, the internet and other innovations can offer opportunities with the potential for lower costs, better margins and reach. Traders should take advantage of the power and potential it can bring them.

The auto trade is fortunate to be one of the last retail industries to experience disruption from the internet and innovation. Trade in music, television, fashion/clothing, electronics, household goods and services has survived the digital transformation. Unlike these categories, the auto trade can look to its past as digital disruption unfolds.

For example, the legacy music industry initially struggled to keep innovation in check and lost tremendous opportunity, revenue, and market share. Apparel/fashion brands that haven’t embraced the technology are either struggling or non-existent. Old car dealers don’t have to suffer the same fate.

While many merchants choose to sell or consolidate, they have the opportunity to adapt and leverage innovation. The first step is to understand the likely future of auto trading and how it can help dealers make decisions and manage change.

For example, the car dealership as a distribution center is a likely scenario where consumers can pick up new and used cars after purchase or have them delivered via delivery service. Or merchants can choose to continue selling directly to consumers by creating a strong position as a digital retail or hybrid company. There is also an opportunity to take both approaches, where they serve as distribution centers for automakers and continue to sell their own stock directly. To stay in the game, dealers should consider these options and start planning today.

There is much to learn from how other retail industries are using technology to enhance customer experience beyond online sales. Retail giant Nordstrom offers customers the option to shop in-store or online and receive their order for either pickup or delivery. Optimized stocks are often found in the brand’s physical stores, along with cafes, restaurants and tailor shops. Value-added channels also offer potential for car dealers. A large number of offline shops offer self-checkout or other efficiency advantages.

Apple customers buy directly from their dedicated sales representative without having to wait at the checkout. In the case of contractual purchases, documents are provided digitally. It reduces time and effort during the purchasing process, and records can be stored electronically to save space and resources.

The car trade should learn from these approaches and consider how to implement similar innovations.

What traders can do today to take advantage of the future is to get a solid understanding of the future and the options available at each stage. While it often changes, a constant pulse can help traders remain savvy, flexible, and ready. This can be as simple as reading industry trades regularly and observing others in the market. Participation in trade fairs and other events as well as maintaining professional networks can also awaken eyes and ears. You should look for innovation partners and platforms that can provide rapid, turnkey advancements and insights. From here, traders can best develop a plan and approach to succeed in the new world that lies ahead.

Nathan Hecht (in the picture above left) is the founder and CEO of Rodo.coman online marketplace that connects car dealers and consumers to buy, sell or lease new and used cars.


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