Consumers, newly comfortable with the notion of researching and making significant purchase decisions online, have been at the forefront of driving digitisation in dealerships, but this isn’t the only pressure being brought to bear to accelerate the rate of digital change. Forward-looking dealer businesses are also identifying the significant opportunities to enhance the efficiency of their operations and promote growth in turnover and profitability.
These dealerships are increasingly looking to funders to partner with them in this digital transformation. Switched-on finance providers, keen to build relationships and boost their share of dealers’ finance portfolios, are supplementing their funding products with digital tools to facilitate this technological journey. The simple fact is that neither dealer groups nor auto finance providers can take full advantage of digitisation without the support and buy-in of the other.
We begin by looking at some of the key trends in the digitisation of vehicle dealerships before focusing on how funders are seeking to support them through the process.
Changing Customer Habits
During the COVID-19 pandemic, the rapid change in consumer habits has become one of the key considerations for businesses across almost every sector. For the retail car industry, lockdowns and other restrictions have massively accelerated the popularity of online research into new and used vehicles and increased the number of consumers fulfilling the entire vehicle purchase process digitally.
For industry disruptors such as Cazoo and Cinch, this has meant a massive investment in awareness-driven marketing, alongside the development of slick end-to-end online purchase journeys. This includes immersive online showroom experiences, virtual vehicle tours, accurate trade-in valuations, servicing, finance and insurance facilities, all packaged in one easy-to-use system.
Leading dealerships have recognised the threat posed by these new entrants. As a result, they have sought to not only match their digital proficiency but to interconnect online spaces with their physical presence, creating a seamless sales experience with greater opportunities for interaction and service excellence than their online competitors can provide.
Use of Artificial Intelligence in Trade-in Valuations
An interesting development in the use of AI has emerged in the assessment of used-vehicle trade-in values. With machine-learning enabled algorithms, valuation models can accurately predict the price a used car will achieve based on parameters such as marque and specification, mechanical and bodywork condition, ownership and service history, colour, location and seasonal factors. Furthermore, as data throughput grows, the models become ‘trained’ and rapidly acquire even greater accuracy, even when key data points are omitted.
Rapidly Evolving Wholesale Environment
If the retail used car market has been leading the digital charge, the wholesale side of the industry has been moving swiftly to catch up. With resurgent consumer demand for vehicles, new market entrants and significant problems with the supply of new vehicles (largely caused by shortages in a range of raw materials, particularly computer chips), the supply of good nearly new and used cars has been put under immense pressure.
This means dealerships have had to demonstrate new-found agility in the wholesale market in sourcing and funding their stock inventories. With much of this market now operating through fast-paced digital channels, dealers have had to develop new competencies in targeting and securing the vehicles that will provide the greatest returns. For many, this has also resulted in a step outside of their usual stocking preferences to marques and vehicle ages and types that they would not typically have considered. This has, in turn, increased dealer reliance on detailed insight to optimise acquisition strategies.
Managing Rapid Stock Turnover
If sourcing vehicles proves challenging at the input side of the dealer business, managing rapid turnover of stock as it moves through diverse channels to output at the point of sale can be equally confounding.
Without accurate and up-to-date management information on vehicles in stock, their physical location and their progress through the sales funnel, it’s impossible for dealerships to maintain their digital sales and marketing platforms and manage leads effectively.
Traditional, manual auditing of the stock portfolio proves to be woefully inadequate in this new environment, both in terms of accuracy and timeliness, leading to poor customer experience and lost sales opportunities.
Integrated Dealer Management Solutions
With the burgeoning array of online systems available, including vehicle sourcing, stock financing, online marketing solutions, virtual showrooms and consumer finance calculators, dealer groups are seeking to integrate these to maximise efficiencies and ensure consistent data. Wholesale vehicle funders are increasingly partnering with providers of these solutions to help their dealer partners deliver seamless customer journeys and shared insights into business performance.
Enhanced Marketing Opportunities
The pandemic environment has seen huge growth in the already flourishing digital marketing space, with some estimates for 2021 giving digital marketing activity as much as 75% of total spend. Marketing in the auto industry follows a similar path, with the dual impact of changing consumer buying habits and new, digital-only market entrants being key factors.
These new marketing channels are intensely data-hungry; managing successful online showrooms, running effective social, search, display, and retargeting campaigns all require next to instantaneous updates of vehicles in stock. More than this, deep data on vehicle specification, interactive visual representations and the availability of consumer financing also need to be incorporated.
For those on the cutting edge, geolocating advertising technologies provide opportunities to target potential customers on their mobile devices when they are close to a dealership, increasing opportunities to bring digital and physical sales channels together.
Funding Partners for Automotive Dealerships
In a world where the automotive industry is moving towards digitisation, it’s crucial for dealerships to adapt quickly. To stay competitive in this changing landscape, they need to make sure that their funding partners are able to offer solutions and support.
How CheckVentory Audit Can Help
CheckVentory Audit gives auto finance providers confidence in identifying dealer groups that offer the greatest potential for growth while highlighting areas of risk where they exist. The technology used increases operational efficiency and promotes a collaborative partnership between funder and dealer in understanding and optimising their stock inventories.