What does the future hold for car dealerships?

If you have ever bought a car, you will know from experience that visiting a car dealership can be a painful process. There are just so many car options to choose from that you are likely to get confused unless you have a fixed choice in mind before leaving the house.

Buying a car also involves a huge mould of paperwork – from the sales agreement to driving credentials, insurance, and lots more. It is no wonder that more and more people prefer to buy cars online rather than visit the dealership.

In 2015, a survey was carried out among 10,000 car buyers in the US and other countries. This car buying survey showed that fewer people are willing to visit the car dealership to buy a car. In fact, a quarter of the respondents said that given the opportunity, they would prefer to complete the buying process online, from selecting their choice car to completing the paperwork, making the payment, and taking delivery of their car.

A different study showed that millennials would prefer to share rides with total strangers using any of the increasingly popular ride sharing app, rather than face the technicalities involved in personal car ownership. This data put together predict a gloomy future for the traditional car dealership.

The coming demise of car dealerships

In recent years, it has become increasingly easy to buy the car of your dream online without having to leave the comfort of your home. Combine that with busy schedules, high paced lifestyles, and little or no downtime, you have a situation where car buyers are ready to buy a car as is, without seeing it, and without knowing anything about it, other than what they read on the web.

In fact, more than 40% of car buyers say they don’t mind buying a car without test driving it (which is the primary selling point of car dealerships), as long as the car seller offers some form of guarantee. Additionally, more than 50% of car shoppers liken visiting the car dealership to an unpleasant household chore, and would rather do their purchase online.

What this means is that in the nearest future, more and more people will opt for online car purchase, while the traditional car dealerships may likely experience an alarming decline. As a matter of fact, experts predict that in most places, car dealerships will no longer exist by 2025, and family-owned car yards will likely be the first to be affected.

Buying cars in the future

Buying cars online is not a new development. In fact, way back in 2017, Automotive News predicted that online car purchases will account for about 10 percent of the total cars bought in 2019. In hindsight, this was a cautious prediction because in 2015 it was already a well-known secret that around 75% of car buyers no longer enjoy the car dealership experience and in a survey said they would be open to other alternatives.

Also, big names in eCommerce like Amazon and eBay were already exploring the virtual car dealership industry with Amazon setting up an online car research website, a move that solidly moved car buying into the eCommerce sphere.

Today, buying a car online is not just easier, but offers a wide range of options that have made traditional car dealerships unnecessary and obsolete. A good example is the adoption of augmented reality in online car buying. This puts the buyer directly in the car seat and allows him or her to explore all the features of the car without ever once stepping feet in a car dealership. Shoppers can see more of the car they want to buy, and even have a virtual feel of what it will be like to actually drive the car. This totally defeats the need to visit the car dealership.

With the power of the internet, there is no longer any need for a salesperson to preach about the special features of a car because the prospective buyer can see them online. And there is no longer any need for someone to sell them a car, as the buyer can do all the needed research online, and determine if the car is a fit or not. Of course, there are still a few diehard dealership fans that will never buy a car except they physically visit a car showroom, physical inspect the car, and possibly take it for a test drive before buying, but will this small number be enough for car dealerships to survive?

If dealerships are to survive, they must evolve from transactional centres to experience centres, offer omnichannel options, and consider creative ways to attract and keep customers beyond the air freshener and extra foot mat normally used to close a car sales deal.

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