New Orleans — One automotive executive wants car buyers to spend a mere hour in dealerships while completing the purchase. If achieved, that would mark a seismic shift in how consumers buy automobiles.
Alicia Boler-Davis, a GM vice president of quality and customer experience, said at the National Automobile Dealers Association conference here that she wants to winnow to one hour the time a customer spends with a dealer. The average time today for all dealerships is about three hours, according to AutoTrader, an online marketplace for new and used cars.
But analysts say dealers throughout the auto industry are ill-prepared to meet such an ambitious goal anytime soon. Most haven’t yet figured out how to connect the in-showroom shopping experience with the growing online component of research and comparison that most buyers come armed with.
“That’s a big issue,” Hoyt Harbin, president of Harbin Ford Lincoln in Scottsboro, Ala., said in an interview at the conference. “I don’t know exactly how we’re going to do it, but it’s something we need to be looking at.”
The window of opportunity for individual dealers is shrinking, too. Car shoppers now visit, on average, two dealerships, compared to five about a decade ago.
Boler-Davis and others in the industry know the facts: Most consumers spend hours researching vehicles online through websites like AutoTrader, Kelley Blue Book and Edmunds.com before heading to a local dealer — presumably the one with an attractive price that fits that consumer’s needs — to finish the sale.
But more often than not, the customer will still spend hours there, either listening to a sales pitch or filling out paperwork.
Dealers are working on solutions.
Many dealership websites offer a live-chat feature, so the dialog between seller and buyer can start before the customer walks through the door. Dealer.com, a Vermont-based firm that creates websites for auto dealers, is creating a system in which shoppers can track the location and price of a specific vehicle, and dealers can see which vehicles a shopper is interested in, based on an online profile.
GM’s Shop-Click-Drive program, which allows buyers to research and even purchase a vehicle online, has significantly reduced the amount of time a customer spends filling out paperwork and completing other redundant, time-consuming tasks.
A website developed by Dealer.com now allows buyers to place a deposit on a vehicle they find online. The $500 deposit is refundable if the customer changes his or her mind within seven days.
But analysts and dealers say it is unlikely that the entire car-buying process will move completely online anytime soon.
How consumers research vehicles online, however, may shift the way dealers negotiate deals.
An online venue like Kelley Blue Book, for example, offers prices for each vehicle listed on the website that could fluctuate depending on season, incentives or the number of available vehicles — compared to one standard price that a dealer posts online or advertises on television or in a newspaper.
Most consumers would rather start negotiating a price for a vehicle within a range, and not be bound by one standard price, said Jared Rowe, president of KBB. Research shows 89 percent of used-car buyers would agree to buy a vehicle within the range stated by KBB or another third party. About half of new-car buyers would do the same.
U.S. automakers are primed to sell 16.2 million new vehicles this year — the most since 2007 — and consumer spending on new vehicles sold in the U.S. could reach nearly $400 billion this year, according to J.D. Power and Associates.
Those figures have dealers feeling as good as they have in years.
“It feels as positive as it has in a very long time,” said Brian Godfrey, general manager of Pat Milliken Ford in Redford Township.
But dealers are playing catch-up in the digital retail space, at least compared to other industries. And at least some of that delay is due to the recent recession and auto industry crisis, when more than 3,000 dealers closed and more than 10,000 others faced financial constraints.
“Car dealers are back to the confidence level where they can take risks now,” said Dave Winslow, chief digital strategist at Dealer.com.
Winslow believes the industry has reached an “inflection point,” where dealers will focus more on targeted online marketing. “It was a tough conversation to have two or three years ago,” he said.
That marketing integration will overtake online resources that list only things like price and option packages, and don’t provide any interaction with a dealer — because those don’t offer the insight dealers need to speed transactions.
“The days of the Internet just being informative is done now,” Jim Farley, Ford’s marketing chief, said Sunday at the NADA conference.