Buying a new car is one of those scenarios that will either fill you with excited anticipation or have you dreading the whole experience. But it’s not all roses for the dealership either.
Challenges in finding new stock, high fees from third-party sellers, and lack of control over the customer experience are making it increasingly difficult for local car dealerships to run a profitable business.
However, implementing an automotive direct-to-consumer model could offer a way forward that provides more for the dealerships and benefits the consumer.
In this guide, we’ll explain exactly what’s involved in this new way of working and how it could be the lifeline that the local car dealerships need.
Life Before the Internet
It might be hard to imagine, but it wasn’t so long ago that there was no internet, Google, or social media. So, that meant that dealerships sourced their new stock by owners turning up at their site and asking if you’d like to buy their car or offering it in part exchange. Then there was also the option of purchasing new stock at an auction.
When the dealership then needed to make sales, they relied on forecourt sales and advertising in local newspapers. And that was it, a pretty straightforward process.
The Advent of the Internet
Now, it might be argued that the internet, at least in the beginning, opened up some new avenues for the moto trade to sell their cars. First of all, there were sites such as Autotrader.
This suddenly meant that your stock had visibility right across the country, and when someone was looking for a particular model that the dealership just happened to have, the customer would travel to snap it up. Now there were few geographical limits to the reach of the advertising.
Then along came eBay. Not only did it offer the opportunity to sell at fixed prices, but there was also the opportunity to shift those cars that weren’t selling via an online auction process.
Both of these routes to market meant the payment of a commission but, maybe, that new increased reach was worth the reduced profit margins.
The Current Motor Trade
As the UK public became more used to making large purchases online, direct sales companies began to arrive on the automotive scene.
Buying platforms that promote the ease with which cash can be handed over for your car can be hugely appealing. And, when accompanied by huge advertising campaigns fronted by well-known celebrities, it can feel as if the local dealerships just can’t compete.
But there’s still the auction houses, I hear you say. Well, yes, there are, but they too have realized the benefits of dealing directly with the consumer. Organizations such as British Car Auctions (BCA) have launched direct-to-consumer websites, and with free home delivery and 14-day returns, they make for a convenient solution.
The Future for Local Car Dealerships
It’s clear that local car dealerships need to adapt their operating model to survive. Many people do want to deal with a local business rather than a huge corporation.
They want the peace of mind that comes from handing over their hard-earned cash to someone standing in front of them rather than entering their credit card details into the void of a webpage.
But, to do that, a different approach is needed. One solution is the direct-to-consumer model. That might sound similar to the way in which the big companies are working, and it is, but there are huge benefits that come from operating this way.
How The Direct-to-Consumer Model Works
The key here is getting in early and before the big guys steal the deal. There are two ways of doing this:
Lead Generation
When someone wants to sell their car, they usually want a quick and easy process. To do that, they might assume that they need to go to one of the big companies.
But, when the local dealership can get access to those leads first, then they get the opportunity to explain the benefits of selling to a local dealership.
Hyper-Local Targeted Ads
Even though the trending platform might change from time to time, social media creates an opportunity to reach the local population. Whether it’s someone wanting to sell their car or buy a new one, they need to be aware of the different options available to them.
By focusing on a twenty-mile radius from the dealership, the advertising reach will bring in the local customer. And, as most car dealers know, that accounts for around half of all transactions.
Adapt or Die
That may sound pretty dramatic, but it is the stark reality of the situation for the local car dealership. Continuing to do the same thing and expecting a different result will simply speed up the process. Working in a different way and utilizing the technology and advertising mediums that we are now so familiar with really is the way forward.
