Published May 23, 2019, Dealer’s Voice –American scientist Bruce Lipton wrote, “There’s a theory that says that life is based on a competition and the struggle and the fight for survival, and it’s interesting because when you look at the fractal character of evolution, it’s totally different. It’s based on cooperation among the elements in the geometry and not competition.” This is how we evolve.
Over the past 50 years, automobiles have served as our “freedom machines,” a means of both transportation and personal expression. Even so, as the industry recognized, the automobile is but one element of a mobility system—an element governed by extensive regulations, constrained by a need for fuel, and dependent on a network of roadways and parking spaces. Automobiles are also a force for change. Over the past half century, their very success has generated pollution and congestion while straining the supply of global resources. The rapid surge of emerging markets, particularly China, has heightened these dynamics.
In the automotive sector, several new species are rapidly emerging. With the wealth of knowledge at our fingertips a new breed of surprisingly educated buyers are here and they have adapted to the point where they can purchase a car in less than 10 minutes without setting foot in a dealership. Cars in vending machines and no salespeople. Love it or hate it, it’s here now, it’s happening. To survive we must adapt and overcome.
How do we overcome this? Let’s identify what caused this… this generation of tech-friendly buyers want an online, seamless, fast experience with everything, even their car purchases. Traditionally a car salesman would say,” No! They need to test drive! They need to sit in the vehicles they like, smell them, see if they feel right, check out how they drive, these things are necessary!” That makes complete sense to us. It’s always been that way, so why change it now?
Henry Ford once said, “Competition whose motive is merely to compete, to drive some other fellow out, never carries very far. The competitor to be feared is one who never bothers about you at all, but goes on making his own business better all the time. Businesses that grow by development and improvement do not die. But when a business ceases to be creative, when it believes it has reached perfection and needs to do nothing but produce – no improvement, no development – it is done”). Many wonder whether these thoughts hold true in today’s economy.
For example, there are huge flaws in Carvana’s car vending machine model. They are selling an experience they think buyers want, but it’s so far from perfect, it gives dealers the chance to revamp their processes. Let’s identify their weaknesses, first and foremost, there are no experienced professionals a potential car buyer of theirs can reach. We can adapt to the digital buying trend that shows no signs of ever going out of style. We can keep the human element in it. Buyers want to talk to someone they can trust, even if it’s over the internet or texts. They like negotiating and feeling like they saved some money and won! Carvana offers none of that.
For dealerships having more than one lender is beneficial. Manufacturer certified pre-owned vehicles are not available through Carvana and their “certified” program is not specific to each manufacture’s guidelines. They don’t have a service department on their lot, because there is no lot. According to a Google search they don’t have service departments, anywhere. They can’t order a roof rack for a client buying an SUV or install a hitch for a guy who is excited about buying a pre-owned truck. They cannot offer the same services that a dealership can, and that’s good news for dealers right now. Dealerships should use this opportunity to adapt to the new buying revolution, otherwise they risk getting swallowed up by the companies that understand evolution.