Dealerships doing business as usual running high risk in age of digital retailing?

Now is the time for dealerships to embrace digital retailing.

That was the message from Mark O’Neil, chief operating officer of Cox Automotive in a recent interview with WardsAuto before he spoke at the 2017 Automotive Forum in New York.

He suggested that the ability to do car deals 100 percent online is about a year away, WardsAuto said.

033017 IL Time to move on from tax season and plan for May-hem (and summer)“Fundamentally, the consumer has learned to engage digitally in every other retail category – shoes, pizza, mortgages, electronics, books, pick any category,” O’Neil said, according to WardsAuto. “But the auto industry has held back in letting them do it.”

O’Neil’s message comes down to “if the industry doesn’t [change], someone will create a disruptive technology that will put the current dealer or manufacturer at risk.”

“When customers want something, they always get it,” the executive told WardsAuto.

Looking at the data

Although dealers might say they already have embraced digital, “when you look at the data – we look at how enabled websites are to transact electronically – they are woefully under delivering,” O’Neil said.

“Everyone has embraced using digital for merchandising and increasing brand awareness. The industry has done a terrific job of letting customers use the Internet to research, shop and get pricing. But not, ‘OK, now I want to buy it.’ That’s a huge leap. The dealers who enable that will thrive.”

O’Neil said that “all the pieces, absent one, now exist” for 100 percent online transactions.

The missing piece

“That missing piece is the secured, legally binding contract. But we’re getting real close to that,” the executive told WardsAuto. “The four tools that are available online are getting a real payment, getting pre-approved, financing, seeing an F&I presentation – and selecting products that fit needs – and getting an offer on a trade. By embracing those four, you’re 80 percent of the way there.”

O’Neil’s comments echoed a recent report in Automotive News, which cited industry experts who believe that the 80 percent or more of “dealers who lag behind [on technology] must catch up or face a fate similar to that of independent bookstores in the era of Amazon.”

Dealership concerns

Among dealership concerns with going fully digital are the loss of personal contact with prospective buyers and the perception that the sale of F&I products will be hurt, the report suggests.

Although Automotive News cited one dealer, David Kain, president of Kain Automotive in Lexington, KY, who said that “the studies we’ve seen show that consumers actually buy more F&I products using iPads in a dealership on their own than a finance manager can sell them.”

See WardsAuto’s full report on its interview with the Cox Automotive executive.

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