Early reports from most countries around the world indicate that auto sales in March have nosedived as efforts to mitigate the COVID-19 crisis begin to bite. With governments issuing stay-at-home orders, dealerships have seen customer footfall drop significantly or dry up altogether leading to markedly reduced auto sales.
We are already getting an indication of what auto sales might look like as the virus passes by seeing how dealers are approaching it in China, which is a few months ahead of the western world in terms of managing the outbreak. Geely, one of the country’s largest automakers, has already launched a no-contact car buying service – the vehicle is delivered to the customer, disinfected, and then the keys are sent separately via a drone.
However, selling vehicles isn’t as straightforward as selling other products – they tend to be expensive, require negotiation of sales agreements, and are often something a potential buyer wants to experience before they purchase. As a result, completely ‘faceless’ vehicle buying isn’t likely to take off in markets used to a more traditional way of doing things, such as the US – just look at the pushback Tesla has faced in trying to sell cars directly to customers without a dealership network.
We’re likely to see ‘halfway house’ solutions evolve, with dealers offering virtual tours of vehicles or negotiations over video calling services.
As a result, we’re likely to see ‘halfway house’ solutions evolve, with dealers offering virtual tours of vehicles or negotiations over video calling services. In the UK, a start-up from the founder of Zoopla called Cazoo, which aims to bring the simplicity of digitalretail to the used car market, managed to raise GBP100 million from investors in March despite the current market uncertainty.
One of the reasons investors were attracted to Cazoo is its focus on digital sales, which is expected to be a selling point once the pandemic comes to an end. Now more than ever, dealers must embrace new methods of selling cars to customers – especially those that allow more of the shopping and buying process to be done remotely. While we expect a relative return to normality once the pandemic passes, we also see a longer-term shift away from face-to-face sales as customers become more cautious about their interactions with others.