By Aimee Chanthadavong
A car salesperson has always been used as a classic example for a sales scenario but even this part of the retail market is starting to feel the pressures.
According to the 2013 national automotive industry survey, 32 per cent plan to grow their sales by over 50 per cent by 2020 through the use of virtual showrooms, social media, online sales and other online communications.
The survey, by Australian Automobile Dealers Association (AADA), which was commissioned to Moore Stephens Automotive, also found over 65 per cent of automotive dealerships report less than 30 per cent of their sales are currently online driven.
“Given the predicted growth in online sales, operators in the automotive industry will need to be prepared to embrace multi-channel online communications in order to drive sales, similar to what other retail sectors are already doing” said Brett Fowler, head of Moore Stephens Automotive.
The quickening pace of online retail activity was identified as being of increased importance, impacting not only the expected mix of advertising and marketing initiatives, but also signalling a shift from traditional ‘bricks and mortar’ investment. In fact, 79 per cent of respondents identified the concept of a virtual showroom as a key trend.
While virtual showrooms are seen as a key component to generate sales in the next seven years, dealerships and franchisors face the challenge of how to implement the showroom both financially and functionally. Most recognise customers are using the internet for product knowledge and reviews, but feel the test drive will still be paramount.
“It is clear that automotive retailers and customers still value personal interaction,” Fowler said.
“The online sales and communication in many cases enhances this relationship. However, customers are not only using the internet and the automotive retailer’s website to research the vehicle to be purchased, but they are also using it to review the retailer’s facilities and services on offer, such as finance, servicing and parts.
“Potential customers are not just buying a motor vehicle but the entire product experience. Given that customers have access to substantial information prior to visiting an automotive retailer, negotiations with a sales representative are likely to be more limited than ever before.”
Accordingly, further investment into online presence will be needed. The majority of survey respondents felt future investment will be in workshop facilities and virtual showrooms. Moore Stephens believe that collaboration with franchisors and distributors is needed in order to make this a cost effective undertaking.
“We are entering a period of enormous change for the Australian automotive industry with difficult challenges ahead,” Ian Field, AADA chairman, said.
“The Australian automotive industry is not sustainable with 66 different brands in a market of a million sales a year. Looking ahead, as this research does, we need a more rational approach to facility requirements for automotive dealerships given that consumer patterns are increasingly shifting to online sales.
“Automotive retailers and franchisors need to agree on the optimum level of investment for sustainable retail business models in respect of these emerging trends.”