Today’s automotive dealership experience is nothing like the traditional, old-fashioned car-buying process that our parents and grandparents experienced.
Welcome to the Modern Dealership
The U.S. automotive industry is at the forefront of innovation. Auto manufacturers spent $108.7 billion globally on new research and development initiatives in 2017, according to the Alliance of Automobile Manufacturers, far outpacing the $22.5 billion spent by the entire global aerospace and defense industry. Auto manufacturers typically invest $18 billion per year on R&D in the U.S. alone — an average of $1,200 for each new vehicle produced.
While manufacturers are chasing the future with smarter engines, hybrid technology, and streamlined design, local auto dealerships are following suit, from making major capital improvements to their facilities that include “green” renovations, and offering a modern service and sales experience, with online tools and digital platforms dedicated to making the purchasing experience as easy and convenient as possible.
Part of that innovation transformation at both the automaker and the dealership is being driven by the need to keep up with changing customer behavior and expectations. “Significant changes in the operating environment and within the auto retail ecosystem are forcing automakers and dealerships to rethink their model,” EY, a professional services company, noted in its Future of Automotive Retail report. “For dealers, the transformation is a significant opportunity to streamline their operations by shedding non-value-adding functions and unlocking capital from redundant infrastructure, while taking on a wider service portfolio that contributes to better margins.”
The emphasis at the modern dealership is on the customer experience, and for the customer, experience is everything, particularly when it comes to the car buying experience. Almost three-quarters (71 percent) of consumers want to get accurate, detailed information on the deal online and just over half (51 percent) want to start the buying process online, according to Cox Automotive’s Future of Digital Retail study. However, when it’s time to actually purchase a car, consumers depend on their local dealership, with seven in 10 saying would never purchase a car without physically seeing it first and 62 percent saying they still want help from dealership staff even if online purchase options are available. “The technology and tools are here to make car buying more efficient for both consumers and dealers,” said Mike Burgiss, vice president of Digital Retailing at Cox Automotive. “With new solutions streamlining and improving the experience, we firmly disagree with anyone who says the dealership is dead—it’s not, but the old way of car buying certainly is.”
Automotive retailers who understand how to use technology to enhance the customer experience at the dealership stand to benefit the most in today’s retail environment. According to the Cox study, 85 percent of consumers are more likely to buy from a particular dealership that allows them to start or complete nearly all of the vehicle purchase online. “In the auto retail business, you sell a person one vehicle, but over the next five years they're going to be in your store 20 times for servicing and maintenance, so you get one shot to sell them the car but you’ve got 20 times to build an experience,” Charles Seguin, the president of Seguin Advisory Services, an automotive retail consulting firm, recently told the Globe & Mail. “If you think of it as a five-year relationship rather than one stop, then you get a better view of what the dealership business is all about and why some of these facilities are structured how they're structured.”
A Dealership With the Wind at It’s Back
If you’re driving along Stonecroft Boulevard in Chantilly, Virginia, you’ll likely see a 125-foot wind turbine nestled among the industrial street lights lining the parking lot of Honda of Chantilly – It’s the only business-dedicated wind turbine in the state of Virginia.
“We’re extremely conscious of being conservative with energy and environmentally friendly,” said Dani Hart, internet sales and marketing director for Pohanka Automotive Group, of which Honda of Chantilly is a member.
The windmill has a capacity of 20 kilowatts and supplies electricity directly to the dealership as well as to the grid. “Most of the wind is at night and it feeds back into the grid because you can’t save it. It’s a good example of how we’re trying to take those additional steps to help the community in which we serve,” Hart noted.
At $250,000, the windmill was a major investment. “It’s one of those things that can be a pretty high expense that a lot of businesses wouldn’t do but it’s directly up our alley. We’re willing to put our money where our mouth is. And that’s what we’ve done throughout our 100 year history,” Hart said.
Honda of Chantilly’s other green technologies include everything from systems for reducing and recycling water usage to LED lights and indigenous landscaping. “I believe that if businesses can really just get conscious of how they effect of their local communities—that’s enormously important and to me it should be a pre-requisite to being able to be a business in a community,” she explained.
Operating in the Washington D.C. area since 1919, Pohanka Automotive Group is one of the oldest dealership groups in the nation. Being a private, family-owned company has allowed its business leaders to take risks and embrace new technologies, said Hart. “We’re the oldest dealership in the D.C. metro area that’s privately owned, which I think enables us to be sometimes more innovative, more progressive, and a little more nimble. Sometimes it feels like the market is changing so quickly but when you are privately owned, it’s a lot easier to make quick changes and adapt and evolve quickly.”
Pohanka has refurbished or built brand new sales and service centers across 90 percent of its 17 dealership rooftops. And in those rebuilds, the company has been focused on conservation “whether it’s the water or electricity or the pavement in the lot – there’s just a lot you can do correctly during the building process that really helps conserve the resources that everyone is trying to save,” Hart said.
A Constantly Evolving Modern Dealership
Auto dealer Trevor Gile didn’t set out to be an industry innovator. At first, he was just trying to solve a problem—what to do about snow.
Cleveland Heights, Ohio—where Gile’s Motorcars Honda is located—gets about 70 inches of snow each year. That meant constantly cleaning snow off new vehicles and moving them around the 200-vehicle parking garage to avoid snow plowing.
“We weren’t really ‘green’ dealers,” Gile said. “We just had an issue with our parking garage every winter. We were plowing it and damaging the parking garage and the cars in the process.”
A sales person came up with the suggestion to add solar panels to the garage. Dovetail Solar and Wind crafted and designed the $1.7 million investment—two huge canopies holding 1,240 solar panels, each of which generates up to 270 watts of energy. Gile says the energy generated over the last two-and-a-half years has been more than enough to offset the carbon footprint of the entire building, every new and used car sold, all of his employees cars, every parts truck, shuttle van and rental vehicle at the dealership, and even his personal travel tied to work.
In fact, Motorcars Honda was named the first carbon-neutral automotive dealership in the world by BP Global. The dealership is also one of only 10 U.S. dealerships to receive Honda's Environmental Leadership Platinum Award, and was named 2015 Ohio Business of the Year by Green Energy of Ohio.
When it came time to get the word out about his solar initiative, Gile turned to his attention to marketing firms, but found himself thinking that he could do a better job of telling his story. So, in 2016, Gile launched Edge of the Box Marketing, a nine-person firm that today helps about 40-50 auto dealers a month with website maintenance, email marketing, social media campaigns and niche marketing.
Gile didn’t stop there. He’s doing everything possible to keep customers happy while they visit his dealership, including creating a Kid’s Club area, complete with a mini service garage, Lego racetrack, video game racing chairs and driving simulators, and a 500-gallon aquarium. Gile followed up by opening Daylight Donuts & Coffee, the region’s first full-service donut and coffee shop to be located on the grounds of a car dealership. The shop sold 40,000 donuts in its first month. “We wanted the ability to bring it in-house to serve our customers but also open it up to the public,” Gile said.
Motorcars also features what Gile calls the “delivery bay experience” complete with fog machines, a laser light show, and an iPad equipped with Spotify so the customer can pick the music they want to have playing when they enter the bay take delivery of their new car. “All the statistics show that customer satisfaction and happiness during the car buying experience goes down significantly after the finance portion so we wanted to find a way to rejuvenate that feeling,” Gile said.
Creating the Next Customer Convenience
Gile’s latest dealership technological innovation is also meant to improve the customer experience, this time, the service experience. Motorcars recently unveiled its conveyor-driven Express Service Lane.
After the customer checks in with a service advisor who uses the vehicle identification number to pull up its maintenance history and any recall information on a tablet, the vehicle is pulled along a 100-foot service drive with six stations, stopping at each one for two minutes before moving along to the next.
Meanwhile, the customer watches the work being done on large TV monitors, including oil change, tire rotation, 20-point inspection, and filter changes. The entire process has reduced customer wait time to under 30 minutes for a base price of $49.99.
As a result of the system, the dealership has drastically increased technician productivity and efficiency, and reduced labor costs – all while leading to higher customer satisfaction. So far, the Express Service Lane can service 11 cars an hour, compared to the 30 cars his service area could previously handle. “It comes down to speed, transparency and price,” said Gile. “The man behind the curtain has been eliminated and the customer can see where their car is at all times.”
But what if you have to leave your car for a more intensive service and need to borrow a loaner car? Gile has a new innovation for that process as well. “We now have a software company and we just launched a loaner software management system to help dealerships manage their rental fleet,” Gile said. “It’s a digital system we created to go along with the whole express service and focus on going paperless and eliminating bottlenecks.”
The cloud-based system, which is called Rental Recorder, ties to all existing Dealer Management Systems, uses predictive indexes to manage loaner fleets, and can be used on a tablet. “It’s very user friendly and is focused on making it easy for dealerships. There’s no learning curve. It takes seven minutes to learn how to use the entire software program,” Gile said.
From solar to software, Gile and his team are embracing new technologies to create a truly modern automotive dealership and customer experience. “Every business is changing, and our consumers and employers are changing and if we don’t adapt, we’re going to become the next Blockbuster,” Gile said. “We believe we’ve got control over our future right now where we can set up our business to move forward.”