Where Are The Best Car Deals, In-Store or Online?
The automotive industry has been evolving more rapidly in the last 10 years than ever before. According to CoxAuto, consumers visit an average of 4.2 websites when car shopping, with 81% visiting at least 2 websites. Buyers are primarily doing research and comparisons for their next vehicle, so by the time they get to the dealership, they have a good sense of what type of vehicle they want to buy. While the consumer journey may begin digitally, 61.4% of customers still prefer to buy from the dealership brick and mortar store according to a recent study from “The Zebra”. For many people that begs the question, are the car deals better online or in-store? The answer has a few nuances - let’s check them out.
Although you won’t have trouble finding many instances that include lots of traditional negotiation of a car deal in the store, the lion’s share of publicly-traded dealers have long since adopted a ‘simplified pricing’ approach. This approach is not a new one, in fact, it was around 1990 when Saturn was launched that ‘No-Haggle’ pricing emerged. What this strategy did was level the playing field for all of the Saturn dealers, reducing the price wars and focusing on Customer Experience.
Many of the leading automotive retailers like AutoNation and CarMax, along with a host of independent car dealers, have since adopted “One Price” or “No Haggle” pricing on their used cars. This pricing model runs across the platform, whether digital or in-store. The strategy is three-fold: peace of mind for the consumer, fair and competitive pricing, and more predictable profits for the dealers.
When this branding and pricing strategy is in place, it serves the customer well both online, and in-store environments where a sales professional can discuss the differences in each model and the customer can experience the actual car they want to buy. This is the beauty of the used vehicle market, no two used vehicles are alike and a live interaction with a salesperson and the vehicle is an essential part of the customer journey.
To bring peace of mind to the buying public, a Consumer Reports article noted that ‘any published price, whether online or in print should be no different from the price you could get when you walk in the door.’
The new hybrid landscape known as Phygital is here to stay and that is good news for both retail dealers and consumers alike. It levels the playing field, which is a good thing, since all indications point toward a growth trajectory for the coming years. In a recent report by CNN, Ali Faghri, an analyst at Guggenheim Securities, who follows car retailers says, "Demand is incredibly robust, you have a number of tail winds that have all converged at one time. You're not only selling a lot of cars right now, but at record margins." In fact, the nation’s new car sales leader, AutoNation just released Q1 earnings that tripled, that’s right - tripled, over Q1 of 2020.
So what is the outlook for consumers? Due to supply and demand disruptions, primarily caused by the shutdowns of 2020, car prices are a bit higher, but consumer confidence and spending is too. Rest assured, the best car deal available is easily won by the customer with just a little research and then a visit to their local dealer to complete the transaction in the dealership where they will be serviced by a sales professional that genuinely has their best interest at heart and who is financially rewarded by positive Customer Satisfaction Survey results, not just commission.
So while the internet has produced an automotive sales digital platform that seems to compete with the brick and mortar stores, the hybrid landscape is here to stay as is the DNA of the automotive industry. They want to earn your business, close a deal and ‘ring the bell’ so they are here to Continue to prosper
Automatic is a leading automotive fintech platform serving independent dealers by providing fast, automated, secure and transparent solutions, enabling your customers to enjoy their vehicle more quickly with a seamless customer journey. Learn more at https://www.automaticusa.com/