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Adapting Dealer and OEM Priorities in Light of Covid



2021 NADA Board Member Rhett Ricart

Rhett Ricart

NADA Board Member - Ohio
Industry Relations Kia Liaison

Earlier this month, I had the opportunity to speak to members of the Automotive Press Association virtually about what the post-COVID environment looks like for dealers, customers and OEMs. 2020 has been a year of incredible change for the entire auto retail industry.

Dealers and OEMs alike have adapted operations to remain successful in the coronavirus environment and we have all learned that further adaptation will be necessary post-pandemic to maintain success. Dealers, in particular, have been resilient through the unpredictability, and dealers will continue to adapt to whatever is thrown at them. We have for over 100 years!!

As we near the end of 2020 and look to the year ahead, the biggest obstacles to success aren’t CORRUPTION, OBSTRUCTION and DISRUPTION that I’ve discussed throughout my chairmanship. Rather, the biggest obstacle, in my mind, is REGRESSION. Over the past year, the entire industry has made so much positive and productive progress. Our customers, on whole, are happier and more satisfied now than they’ve ever been before as measured by the OEMs themselves.

Unfortunately, most of our members believe that signs of regression by some of our automaker partners threaten to diffuse the strides our industry has made during this critical period of growth and progress. Thanks to a NADA survey conducted over the summer, we heard from more than 11,000 dealers and learned more about these signs of regression.

We learned about dealer sentiment toward changes – prompted by the pandemic – in the sales and service process, and about what’s driving customer satisfaction under this new normal, We also gleaned important insights from dealers about operating a dealership and working with OEMs in a post-COVID world.

In our survey, we found that 82% of dealers believe the digital sales process is here to stay. While that means a great deal, it doesn’t mean that these digital services will work for every customer in every instance. While the pandemic accelerated customer adoption of a fully digital sale, many customers will still want to start the sales and financing process online and complete their transaction in our stores.

Our survey also asked dealers about the importance of six aspects of their physical store in a post-COVID environment. Dealers rated convenience and location for customers as number one, with service center size and capacity, and co-location of sales and service facilities and on-premises customer amenities, following in the number two and three positions, respectively.

This told us that facility preferences have evolved for most dealers and their customers during the coronavirus pandemic. Furthermore, it shows that most dealers believe that as the digital retail experience evolves, OEMs need to rethink their costly and ever changing image programs to better align with the evolving consumer. The size of a dealer’s showroom is not a reflection on the quality of the product they sell or of their dealership. And it does little to influence today’s customer, who places a far, far higher premium on flexibility and convenience than they do the opulence of a dealership showroom. Most dealers believe that OEMs may want to consider carefully whether continually changing and expanding their retail space representation really serves the best needs of the customer.

Our survey also found when asking which areas, they would like additional focus from their respective OEM partners, 64% of dealers want manufacturers to simplify incentives to support and amplify digital retailing. To be successful and credible with digital retailing, the sales process must be transparent to the consumer. For the benefit of the consumer, OEMs need to make dealership incentives as simple and non-complex as possible. For example: Unfair stair step programs have not and will never provide the transparency our customers are expecting and dealers are embracing in this ever-changing landscape.

Customers are going to be more price-conscious because dealers are going to be more transparent to respond to customer needs. Dealers have to be able to right-size their business model to be able to meet what our customers are asking for. That’s all. That’s all we’re asking manufacturers.

We want to work with our OEM partners to ensure that the customer satisfaction that is at record levels stays that way. It’s never been more evident that people find comfort and safety in car ownership – comfort and safety that cannot be replaced by anything else. Dealers are vital to ensuring that customers have access to personal transportation, and have a positive brand and sales experience along the way.

You can listen to my full presentation to the Automotive Press Association event here.

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