The Covid-19 pandemic has put the move to digital world on “hyperdrive” according to the chairman of the National Automobile Dealers Association and the result is likely to be an escalation of a decades-long battle between dealers and automakers.
Speaking to a virtual meeting of the Automotive Press Association, NADA Chairman Rhett Ricart pointed to the move towards doing more business online as further evidence against what he called “mausoleum mandates” by automakers that force dealers to make costly investments to enlarge and enhance their showrooms.
“For most dealers these programs have been costly, burdensome, and didn’t do a damn thing to increase customer satisfaction before the pandemic,” said Ricart, owner and CEO of the Columbus, Ohio-based Ricart Automotive Group.
As proof, Ricart referenced a survey of franchised dealers taken over the summer that, he said, received a record 11,000 responses. In that survey, when asked what business adaptations during the pandemic were here to stay:
- 82%-The digital process
- 73%-Home test drives and home delivery of new vehicles
- 65%-Home pickup and delivery for service
When dealers were asked to rate on a scale of one to 10, the importance of six different aspects of the physical store in a post-Covid environment. The top response, Ricart said, was location and convenience for customers. Dead last was automaker facility image programs.
“Quite frankly they have limited influence on a customer’s car buying process,” said Ricart. “Doubling down now on a such a dubious strategy post-Covid— consumer expectations have so clearly evolved away from an opulent physical showroom and they’re more towards flexible interactions.”
It’s a battle that’s been going on for many years as automakers insist attractive and elaborate showrooms that include cushy customer lounges with a variety of amenities are an important sales tool. But Ricart insists in a digital world that’s an anachronistic strategy that only needlessly sucks dealer resources.
Not only is more business being done remotely and online, Ricart points to the day when electric vehicles comprise a larger proportion of vehicle sales, necessitating separate, “clean” service areas for sensitive electronic components. All that equals additional spending for dealers who will also need to hire qualified technicians.
An NADA program provides such training for entry-level technicians where automakers place their learning programs on the organization’s online portal. Working with universities and junior colleges, students who go through the training are paid while they learn, Ricart explained.
The need is acute and growing, said Ricart who noted an expected shortage of about 70,000 technicians over the next five years.
“There’s more lines of computer code on a Ford F-150 than a 747 jet,” he said in illustrating just how technically complex vehicles have become.
Referring back to this summer’s dealer survey, Ricart said it also revealed frustration over complicated, so-called stairstep incentive programs by the automakers making it difficult for both dealers and customers to figure out exactly how much a vehicle will cost.
When asked what they need automakers to help them with for them to continue to thrive, Ricart said the number one answer is to simplify incentive to support digital retailing.
Some of these incentive programs are like a giant Rubik’s Cube to solve everyday by dealers,” he noted.
The bottom line in a post-Covid world, said Ricart, is both customers and dealers are looking for a much simplified, digital process from start to finish.
Indeed, he predicted, the showroom of the future will be “more of a delivery center,” where customers choose their vehicle online, and, like today’s Apple
“I think any building you have now,” concluded Ricart, “40 years from now is not going to look like a building you really need. Period.”