Despite challenges, retail auto industry continues to evolve and innovate

COVID-19 has led to new tech and a more customer-centric mindset

By Michael Eatson Wheels.ca

Mar 5, 2022 3 min. read

Article was updated 3 months ago

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Since March 2020, new car dealerships have struggled with vehicle inventory issues due to the global computer chip shortage. Most automotive brands have been in short supply in terms of satisfying market demand.

Although manufacturers are slowly ramping up production, it could be a year or longer before vehicle production returns to pre-pandemic levels.

Most car buyers are aware of this issue and have accepted the reality of limited availability of in-stock models and longer-than-normal delivery times for factory orders.

Consumers are also aware of the reality of supply and demand. With limited supplies of vehicles on hand, manufacturers have abandoned or reduced incentives. Dealers, for the most part, are holding out for list price on the few in-stock and incoming models.

In some cases, manufacturers are looking at ways to insert themselves into the process, and today’s digital experience is somewhat enabling that to happen.

There is speculation about whether or not the “one price” model will serve as a catalyst to change the age-old realities of negotiation and dissatisfaction with the car-buying experience. For years, consumers have been asking for a one-price model.

Personally, I think our industry is moving in that direction, although it may take a few years to fully implement.

Of course, there are always exceptions. If a particular model is in limited supply and high demand, simple economics dictates it could command a higher price in the marketplace. Conversely, if a particular model is oversupplied, there is a strong likelihood that it would be discounted.

Pricing is always going to be an important factor in buying a car. However, based on my experiences in the past two years, consumers are happy to pay a stated price for a vehicle and avoid the negotiating process altogether. Part of this acceptance of a one-price model is that consumers are placing a higher value on the overall dealer experience, which includes relationships with staff, convenience, and quality of service.

I would argue that two positive developments have emerged from the pandemic and the shortage of inventory.

First, the shortage of new vehicles has led to an increase in the price of pre-owned vehicles. If a customer trades in a car at a dealership, or sells it privately, the value of that trade has increased substantially. This increase more than offsets the increased cost of a new vehicle.

Secondly, the pandemic in general has given rise to a more customer-centric mindset. Dealers have always prided themselves on being customer focused, but since the start of the pandemic, dealers have developed new ways to enhance the customer experience.

From the rapid implementation of innovative appointment-booking options, to updating websites and embracing new digital platforms, dealerships have found ways to provide an improved level of service.

Since introducing new booking appointments for service, many dealers have seen a sharp rise in the number of service appointment bookings and less walk-in traffic.  This has been good for customers, and it has given dealers greater predictability and efficiency in their service departments.

The pandemic has been a harbinger for innovation within dealerships. Some dealers have introduced a 24-7 service kiosks with touchscreen and voice prompts, allowing customers to drop off their vehicles and keys, pay for service work performed and pick up their vehicles without any direct interaction with staff.

Many dealers have also introduced a door-to-door pick-up and drop-off service and eliminated their shuttle service.

As the winds of change continue to blow across the retail automotive landscape, dealers and manufacturers are continuing to adapt and innovate to meet evolving consumer expectations.

Michael Eatson is president of the Trillium Automobile Dealers Association and is president of Peterborough Volkswagen. This column represents the views and values of the TADA. Write to president@tada.ca or go to tada.ca. For information about automotive trends and careers, visit carsandjobs.com.