Dealerships Remain Critical to Buying Experience Despite Predictions of Disappearance

In the wake of the COVID pandemic, many predicted the demise of auto dealerships. Study after study “revealed” more and more buyers were comfortable conducting most of their purchases online, especially younger buyers. Now with things nearly back to normal, it seems the reports of their demise was an exaggeration.

During the pandemic, more and more Americans used to the internet to handle some part, if not all, of their vehicle purchases. The move was necessitated by restrictions designed to limit the spread of COVID-19. However, many buyers took this new way of buying a vehicle. Dealers across the country bulked up their internet presence and capabilities in response.

In fact, many predicted that this shift would become permanent, forcing dealers to revamp their current model in response and ultimately leading to dealers becoming little more than distributors of newly sold cars, trucks, utility vehicles and minivans.

However, something happened along the way, buyers found that dealers actually were pretty helpful. A new study from ChangeUp, a Dayton, Ohio-based agency, shows that car dealers are finding ways to remain an integral part of the buying process, especially with the once-skeptical Gen Zers and millennials.

What the study shows

For so long, the words “auto dealership” imparted a negative image on people. However, dealer stores have undergone a tremendous amount of change in the past decade both in terms of how they look and their approach to potential buyers.

“Our findings indicate exactly what we’ve seen with our clients these past few years – that the dealership remains a fundamental part of the car-buying journey,” said ChangeUp’s CEO Lee Carpenter.

“The dealership is so much more than just a transactional space. It’s an opportunity to design a holistic retail experience that brings your brand to life and connects you more deeply with your customers.”

Some of the finding of the study include:

• 80% of gen z and millennials weren’t certain about their vehicle choice until visiting a dealership.
• Around 90% of respondents felt that the dealership made them confident in their purchase decision, with a consensus that it positively influenced their trust in the dealer and feelings about the brand.
• Over half of respondents dismissed dealerships based on their appearance, highlighting the significance of design.

The results support the findings of others. According to the 2023 Cox Automotive Car Buyer Journey Study, buyers were much happier with their dealership buying experience than in 2022. The study showed 69% reported being “highly satisfied with the process” compared to just 61% the previous year.

Recent improvements helping

There are several factors that play in to the shift, including a rise in available inventory. However, other factors included proliferation of an omnichannel approach to vehicle buying. This approach combines online and at-dealership activities, resulting in a more satisfying and efficient vehicle buying experience.

Notably, the percentage of buyers highly satisfied with the overall shopping experience increased to 73% for new-vehicle buyers and increased from 58% to 68% for used-vehicle buyers. At 80%, new electric vehicle (EV) buyers continue to report the highest levels of satisfaction with the process.

Positive feedback extends to crucial touchpoints such as the test drive experience (82%), vehicle pickup and delivery process (79%), and interaction with the sales team (77%).

“There is an often-cited narrative that suggests going to a car dealer is worse than a root canal,” said Isabelle Helms, vice president of Research and Market Intelligence at Cox Automotive.

“Our research and data, however, suggest that this is simply not the case. In fact, 79% of new-vehicle buyers were highly satisfied with the experience provided by their local automobile dealer.”

More sales stories

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• EV Sales Could Slow as Tesla, Nissan, GM Lose U.S. Tax Credits on Some Models
• That Vehicle You Want is Likely in Stock Again — Maybe With a Discount

Adapting and growing in importance

Perhaps one of the most notable things they found was that 88% of the respondents agreed the dealership provides important information they could not get online.

While the study came across most of positive impact dealers can have on potential buyers, it did offer a reminder of the negative impression many people had — and still have in some cases — about the dealership experience.

More than half, 55%, avoided dealerships due to their appearance, and 82% said they elected to not buy a vehicle from a dealer where they had a bad experience. That result is nearly mirrored at 78% saying they’ve elected to not buy from a dealer if they didn’t like the dealership’s sales process.