The State of Automotive Service & Digital Retailing: Why Car Dealers Should Focus on the Service Drive in 2017

For years, there’s been talk of the industry heading towards online car buying. At ActivEngage, we agree and endorse this presumption. Just not right now. The industry tends to overestimate what’s going to happen within a year and underestimates what will happen in five years.

DealerSocket Study on online car buying

In 2012, we launched a pilot to support General Motor’s Digital Retailing Program with 100 dealers in 8 states. The program allowed us to test the validity of online retailing, and the performance showed that car buyers don’t want to buy cars online. In fact, our numbers showed a significant drop in ActivEngage chats that attempted the full retail experience. We found that forcing consumers to buy online can actually hurt sales.  
There’s no one size fits all to automotive retail. The industry needs to be flexible to consumer demands while also protecting the current working business modelWhile we developed these digital retailing programs with auto groups and OEMs, we uncovered how dealers can turn leads into showroom traffic. And, we were able to launch technology that helps dealers increase fixed operations profits.

Shifting Gears: A Focus on Service  

An even more pressing reason to turn the attention from online car buying to fixed ops is the numbers. US auto sales in March came in below market expectations and gave early evidence that America’s boom in car sales is losing steam. As car sales flatten out over the next 24 months, the service department will play a critical part in the financial success of dealerships.
 
OEMs state that if a customer gets service at your dealership, they’re five times more likely to buy a car from you. Additionally, in 2016, 300,000 ActivEngage chat conversations were related to fixed operations; that’s over 800 service-related chats per day.
 
Without a doubt, the service department is the backbone of your dealership. That’s why ActivEngage has integrated with some of the industry’s top service scheduling platforms to set appointments in chat. Our software even sends appointments straight into the DMS. Through our ability to drive online shoppers into dealerships, we’ve found that the service lane is the best way to boost dealership profits.  

Bottom line?

Most shoppers aren’t ready to buy cars online in today’s market. With low consumer adoption, companies like Carvana are struggling to perform as well as a traditional dealership. In the next 5-10 years, we expect things to change and look forward to promoting our service when the industry is ready.
 
Your dealership should prepare for online car buying, but not at the expense of what makes it money today. While consumers want to get answers and set appointments online, they still want to buy a car at your store. Start Increasing revenue today by engaging online shoppers early in the sales process and moving them into the showroom and into the service lane.
 
Make your dealership thrive today, as we continue to track how consumers will transact in other ways tomorrow.