The car salesman has gone through a number of metamorphoses, some unfortunate, since Karl Benz first realised that there wasn’t much point in designing a Patent Wagen unless you had someone to convert it into a profit margin. The dealer has frequently had a bit of a tough time of it, being generally derided as a spiv, a chancer, an Arthur Daley and more recently as a young whelp out for a commission.
Could the dealer’s next image be one of pure nostalgia though? Have we begun an inexorable move towards a vending-machine approach to buying a car?
Flexed.co.uk is a leading UK car-leasing company and it has said that car buyers are now more and more circumventing the dealer to pick and choose what they want online, and only crossing the threshold of the dealership to put in their order and hand over a deposit cheque.
According to Flexed, universal internet access means that more potential car buyers are making up their minds at home and only head out to make a purchase after thorough research.
Research by US company Homestead shows that 44 per cent of customers always research major purchases online before buying from a physical store; while German analytical company Interone says that “research online, bought offline” is significantly widespread in the retail world.
“Big data, review websites, downloadable brochures and price comparisons mean that a lot of people come armed with not only the exact car they want, but also expecting a deal they’ve seen on the internet,” says Flexed’s Johnny Ratcliffe.
According to analysts Frost & Sullivan, the market for so-called “digital dealerships” is expanding, not least because they can be more easily located in city centres, without the need for space-hogging and expensive forecourts and garage facilities. Frost & Sullivan research indicates that, in 2016 alone, car makers will invest up to $5 billion in digitalisation and unveil more than 100 digital showrooms across the globe.
Digital showrooms
In addition to the financial investment in digitalisation, a trend of “floor space” investment is also taking place. Existing showrooms are expected to dedicate 20-30 per cent of floor space to digital technology by 2016, instead of physical car displays. This is on top of the trend toward smaller stores and an expected reduction of 15-20 per cent total showroom floor space by 2020.
“The technology now exists to overcome automotive retail barriers and transform automotive retail as the world knows it today. The next generation 3D car configurator solution provided by IBM and ZeroLight, delivers an experience so ‘real’ that time-poor, urban-based customers no longer need to travel to an out-of-town car dealership, and those who do visit a physical store will have a completely new and exciting retail experience,” confirms Frost & Sullivan consultant Catherine Hutt who produced the paper. “By zooming in on minute details like the stitching, by opening the doors and boot, by turning on and hearing the roar of the engine, and by letting the customer take a virtual test drive in a setting of their choice, this configurator brings the car (and the car-buying experience) to life – virtually.”
This isn’t far off in the future either; Appleyard Cars, based in Yorkshire, has already opened a dealership that is described as “an Argos of cars”. It’s designed so customers can walk in and play with tablets and displays without the intervention of any sales staff.
“We’re finding customers are immensely clued up about the exact cars they want even before they walk in through the door,” says Robin Appleyard, managing director. “They don’t need somebody to sell them a car, because they’ve already made up their mind. Customers are now the experts when it comes to motor purchases, and we’re finding that our staff become more guides rather than sales people.
“That’s why we’re experimenting with largely removing them from the process altogether, because we think the average buyer knows enough to be able to do it all themselves. You do it for just about every other purchase you make, so why not cars?”
If the dealerless dealership is a success, Appleyard plans to roll it out over another six locations. Its success seems likely, especially given that in one major survey in 2013 more than 80 per cent of customers now do their research and selection for major purchases online rather than in stores, while another found internet information and reviews could account for up to 90 per cent of decision- making.
Could such car-sales principles come here? We tend to copy and absorb major international influences, so there’s no reason why not, and the Irish motor trade has been on a hefty course of retrenchment and layoffs since the 2008 financial collapse. A new system that reduces staff (and overheads) could be tempting to major dealer networks.
However, Alan Nolan, director general of the Society of the Irish Motor Industry told The Irish Times he doesn’t see this as a threat to jobs in the motoring sector. “The industry is not unaware of such trends and has already been adjusting and developing to the changing marketplace and this will be continuous.”
Dealership numbers in Ireland have reduced during the recession and to service consumers the balance is always between sufficient outlets relative to the size of population and driving time and distance, and a viable level of sales per dealer.
Evolving dealerships
The market and dealership networks have been evolving for about 100 years and they are continuing to evolve. It is unlikely the number of dealerships will increase again to previous levels even as the market rises but it is also unlikely numbers will fall significantly given the size of the country and a national car fleet close to two million.
The number working in the industry is related to the number of new cars sold. It is rising this year and will increase as the market grows. The profile and skills of staff may be different in the future.
“Yes, you can actually buy a car or a house online but, at present, most buyers parting with the required amount of money will research online and then visit a dealership and close the deal in person.
“I think the future may well see this process made as simple and efficient as possible.
“Most consumers also have trade-in cars, which is another reason for shopping around and this may well be online too, but their car will eventually have to be seen by the buyer. I don’t believe the future will be worse for dealers, but we know for certain it will be different and that may mean different staffing categories and mixes.”
