How Direct to Consumer Sales Impact the Service Drive

How Direct to Consumer Sales Impact the Service Drive

In an ever-changing world, direct to consumer sales have started taking over! And the automobile industry is no exception. Unlike years before, auto manufacturers are selling directly to consumers. And now, with the world changing and becoming more digital, consumers are more comfortable than ever buying everything online.

The ability to access information while making large purchases has its benefits. More buyers are looking for a digital car-buying experience, opening the automobile industry’s direct-to-consumer (D2C) channel.

The rise of direct-to-consumer sales

Electric Vehicle (EV) companies are on the rise. And while the competition is good for the industry, these companies have adapted to using direct-to-consumer sales. By using this method, dealerships are left out of the equation. And, customers are becoming more comfortable with a new normal when shopping for a car (or pretty much anything!) But, what is it about these direct-to-consumer sales that customers like so much?? 

A 90-Day Roadmap to Your Best Fixed Ops Month Ever
Be ready for direct to consumer pricing with a 90-day roadmap

For one, manufacturers are getting valuable data on what their customers want. Customers are now going online from the comfort of their own homes and customizing their vehicles. They pick styles, colors, fabrics, and features via the website. The information collected is then giving the manufacturers information and statistics they need.  

And, with the lack of people visiting the dealerships to pick out their vehicles, dealerships are saving money and cutting costs. Not to mention, consumers can have their cars delivered straight to their homes. Living in this post-pandemic world, more and more people feel that the less contact, the better. 

Will Dealerships Cease to Exist?

Though convenient, are these direct-to-consumer sales hurting the industry? Can we expect this direct-to-consumer model to put dealerships out of business?

As EVs take over a more significant market share in the automobile industry, we see more manufacturers opting for D2C.

In California alone, EV sales took up a 20% market share in the first quarter of 2021.

Personally, I don’t think it will result in an extensive shutdown, where all dealerships go out of business.  Dealerships will still be around for used vehicles and in-person shopping. I like to think of it in the way of Amazon vs. any other retail chain. 

Not everyone enjoys shopping for things online. Consumers still want the ability to purchase in-store. Even if they can buy online and have it delivered right to their door.  

I predict the world moving toward a new hybrid system, where dealerships shift their identity. Yet customers still have the convenience of walking into a dealership and choosing their car.  

What automakers are gaining from the shift

EV manufacturers, like Tesla, Rivian, Lucid, Polestar, and Peugeot (who are only available in Europe), have adapted to the direct-to-consumer model. However, believe it or not, Ford is also gearing up for a direct to consumer sales model for their planned Ford Blue and Ford model E vehicles.

These manufacturers have an unfair advantage over the dealers. The most significant advantage is that they don’t have to maintain floor space. A direct to consumer model also means the manufacturer can control the customer experience, training, and sales.

Manufacturers have been expecting dealers to invest money in upgrading facilities. Updating and training their staff and sales personnel has also been a concern. None of these will be concerns in the direct-to-customer path.

Yet, I believe every manufacturer will take a different approach. If you own a BMW dealership, the experience you create will be different from if you own a Ford dealership.

A 90-Day Roadmap to Your Best Fixed Ops Month Ever
Be ready for direct to consumer pricing with a 90-day roadmap

How Does Direct To Consumer Affect the Service Department

Like every automobile, electric cars will still need servicing. They will need tires, and they will need updates.

This will bring about some changes. Dealers will find themselves needing to change their identity and focus. But, it’s essential to recognize that there’ll still be many opportunities in service.

So, my advice is to ignore the noise. Work on having the best service and parts department you possibly can have. Focus on improving customer relationships and offering a stellar customer experience. Upgrade technical skills to match demand & needs in EVs. Get rid of the constraints and get your profitability in line. 

manufacturers still needs service departments. Because even if a manufacturer goes direct to consumer, they can’t service everyone. There will still be consumers who want a more personable experience. Not to mention, these manufacturers can’t roll out shops across the country overnight. Aim to be the best you can be by improving the process, customer experience, and profitability.

Podcast

On today's episode, Chris and Coach Christian talk about the future of dealerships and consumers and about the dealers going direct to consumer. There are multiple manufacturers going straight to consumer and Chris discusses the different strategies dealers are implementing in order to transition smoothly.

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