The dealership business is currently under threat.
The threat consists in the fact that automakers are redefining the place of dealerships in the sales and after-sales service chain. And the dealer has a smaller and smaller role to play.
At NADA 2019 this problem was emphasized in particular by the Association’s new chairman, Texas dealer Charlie Gilchrist: “If you look at all of us, overall, the profitability of our new vehicle departments is under attack. It’s a real serious issue. If we can sell cars profitably, we can take care of our customers.”
Dealers today really do need to change if they are to stay afloat and not lose their business. And they are trying to do it. Here are the two trends that we noted at the main dealership event of the year in the US.
First of all, dealers have made excellent progress in the field of automating lead generation. On the one hand, internal processes for internal automation have been created, including inventory management and the automation of internal procedures and sales.
Thus, it turns out that we are able to generate a lot of data. On the other hand, the car sales channel is shifting more to online. Correspondingly, lead generation is shifting more to online, too.
Vendors have identified opportunities to combine these needs. They have combined the data, and they are using it to offer dealers analytics to automate the lead generation process in order to organize online sales of new cars and services as effectively as possible.
Secondly, dealers are currently focused on after-sales service. They understand that the margins on sales of new cars are declining, especially in the United States. Car sales levels are themselves decreasing. And the time has come for dealers to concentrate on service, including for used cars, and to do it better online, including through the use of mobile online platforms.
Therefore, dealers are now introducing systems that will enable them to make this distribution channel and lead generation channel as efficient as possible. But we must understand that online the dealer’s task is still to bring the customer to the dealership and then to work with him there.
Both trends are tied to automation and digitalization, areas where telematics are indispensable. At NADA, we noted that dealers demand solutions based on telematics. They especially want systems to be integrated with internal dealer systems that are already mature enough to support such integration.
All warehouse processes have already been solved internally, and customer databases have been created. Thus, the customer can be identified by phone number, and you can see their service history. All of this data is linked together with telematics, analyzed, and then certain services and accessories are upsold to the customer automatically based on artificial intelligence. Telematics is also extremely necessary in warehouse management and operational efficiency processes, because it is important to know where a particular car is in stock, its condition, and whether it is fueled up.
Zurich Connected Cars is offering dealers in the United States a powerful telematics platform for all of your inventory. With our solution you can boost customer retention and sales, leverage your customer data, and automate your inventory management. Everything that the dealer needs today, to change in line with the times. After all, if we take the development of electric vehicles into account as part of such long-term trends, the reliability of cars is increasing, which means that service revenue will decline over the long term. Obviously, services will become increasingly important for dealers, which means they need to change.