In a world where 85 percent of consumers surfing the Internet have made a purchase online, General Motors is hoping its new Shop-Click-Drive program will pave the way for satisfying car buyers who may be craving the opportunity to avoid dealership showrooms and purchase their next vehicle online.
GM’s program is on pace to roll out across the country by the end of 2013, allowing customers of participating GM dealerships to purchase or lease their new ride online.
Meeting consumer demand
But what impact will the ability to avoid the showroom have on dealerships anxious to provide financing and other F&I products to new buyers?
A look at GM’s new program provides some insight into whether or not demand for online vehicle purchasing is a trend likely to stay. Earlier this year, a successful pilot for the Shop-Click-Drive program was launched in Michigan, and it is currently available through about 100 participating dealerships in Alabama, Arizona, Minnesota, North Dakota, Oklahoma, South Carolina and Wisconsin.
GM company spokesperson Ryndee Carney says the program works like this: customers visiting a dealership’s website select the vehicle of their choice, and are then prompted to “create” their deal. Participating dealers must provide concierge service for customers wishing to test drive and possibly take delivery of a vehicle.
Announcement of the program comes at the height of a legal battle where luxury electric vehicle manufacturer, Tesla Motors, is battling accusations it is violating state franchise laws with its direct-to-consumer business model. Tesla’s retail strategy, which allows consumers to buy directly from the manufacturer online, has come under fire in several states.
But Carney argues that GM’s program differs from Tesla since customers are buying vehicles from dealers, not directly from the automaker itself. “So, the vehicle sales transaction must be completed by the dealership. The dealer controls how the application works on his or her dealership website, so it’s compliant with franchise laws,” she explained.
Meeting online demands
About 56 percent of transactions initiated during the program’s testing phase were completed online, a significant amount, but one that shows plenty of room for dealerships to differentiate themselves in the marketplace with updated F&I customer service.
While streamlining the online vehicle shopping experience may help to build brand loyalty, bypassing the showroom may also have some unintended consequences for local dealerships, primarily by way of lost revenue via finance and insurance (F&I) products.
The stumbling block is likely to be in the form of F&I managers not ready to embrace the online buyer than from consumer unwillingness to examine options offered by dealers, even in an online buying scenario. That could be a big problem, eating away at dealer profits as consumers quickly click away to one of a growing number of popular auto financing sites.
It isn’t just GM dealerships at risk, either. Other automakers, eager to stay competitive and build brand recognition with consumers, will likely follow suit in rolling out similar programs.
Risk and Communication
Accepting the reality of the online buyer is the first step dealerships can take in managing risk and realizing return on the growing trend of online purchasing. Dealerships that think offering an online loan application will satisfy the Internet’s vehicle buyers will need to rethink their strategy. Gone are the days when F&I managers could hide behind the curtain, too. Today’s F&I staff need to fine-tune their customer service skills and prepare to communicate with the online buyer, whether through chat window, email, Skype or similar platform.
Begin by reviewing and adjusting your company website to make online purchasers feel welcome and confident about the experience. If current F&I managers are unwilling or incapable of connecting with online buyers, consider dividing your F&I team into F&I online managers and F&I face-to-face managers. The idea is to make the department accountable- not fight against each other.
Keep in mind, online vehicle buyers — like most online consumers — are looking for the best value and are used to finding it online. Be prepared to be factual and straightforward about a customer’s options, a practice that should spell success for F&I managers on the showroom floor as well as online.