Will digital sales kill the dealership?

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P.S. I just saw the first Cybertruck listed for resale online—foundation series badge, 555 miles. Want to know how much it sold for? Read to the end.

—CDG

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Today’s Biggest News

Will Digital Sales Kill the Dealership?

We get everything else we need online…will the day eventually come when we will all get our cars online, too? After all, Amazon last year announced a partnership with Hyundai that lets select dealerships sell cars through the ecommerce site.

But ever since that announcement, dealers and analysts have been quick to point out that online auto retailers—even those as massive as $1.75 trillion Amazon—aren’t capable of jeopardizing the future of franchised dealerships.

I tend to agree.

But…there’s always a but. And this week’s comes to us in the form of an intriguing new stat → 

Digital retailing leads at dealerships climbed 38% last year, according to a study from Shift Digital. And that’s even as overall dealership lead volume fell 7%. The primary reason why digital outpaced everything else: Most drivers might not be ready to hit “add to cart” on a $50K purchase sight unseen, but they are slowly adopting new habits that move us toward a more online-centric vehicle shopping experience (or as we like to say, increasingly “omnichannel”).

• Some 30% of car buyers state that they want to do some or all of the car-buying process online, according to J.D. Power. For EV buyers, that number jumps to 40%.

• And 36% of dealers report using digital retail tools in their showrooms, per CDK Global.

Quotable: “Consumers are continuing every year to spend more time online shopping for their vehicle, finding what they want, understanding pricing payments, structuring deals, things like that,” Shift Digital President Matt VanDyke told Auto News. “The environment changed where the tools have gotten increasingly better that dealers offer to do that.”

So what kind of tech is moving the needle? Here’s what I’m watching:

• For the sellers: EV companies like Tesla and Rivian have come to market by bypassing the dealership model—they sell new vehicles directly through their websites. There’s also some impressive backend tech helping dealers to be more efficient: pricing tools, inventory aging tools, wholesaling, reconditioning, etc.

• For the buyers: Digital and online paperwork makes a bigger difference than you might think. CDK found that 15% fewer buyers have recently reported waiting around to sign a contract, likely a direct impact of digital signing tools getting more popular.

• For the industry pros: Going niche is important. Some simple examples…1) tech companies that created 360-degree photos of online auto inventory like Impel (87% of online car buyers say 360-degree photos are now “indispensable” when shopping for vehicles online) or 2) software that enables end-to-end processing of vehicle reconditioning (Carvana’s tech comes to mind) or AI that can streamline pricing and sales.

• For everyone: Online marketplaces like Cars.com, etc. are seizing the moment as we transition from a seller’s market to a buyer’s market. In case you’re not aware, dealers pay subscription fees to have their inventory listed and manufacturers pay for ad slots—both costs that feel much more justifiable when sellers are short on bargaining power and cars are no longer selling themselves.

Worth noting: Carvana reports earnings this afternoon, 18 months out from a massive restructuring. 👀

The bottom line: Like with most big developments in the auto industry (looking at you, EVs), the adoption of new technology should be taken with a grain of salt. Yes, new technologies are changing the ways people buy cars. No, those new technologies are not going to put dealerships out of business. Instead, the dealers and manufacturers willing to work with tech instead of working against it will be the winners as we slowly but surely get more and more online…at least, that’s my two cents.

This Week’s Episodes of the CDG Podcast

The real cutting edge of auto tech: Reimagining the dealership (see above), and that’s exactly what Tekion CEO Jay Vijayan is doing. He told me about the biggest leadership lessons he learned working for Elon Musk, his vision for the future of auto tech, and why he has no exit plan. Hit play now.

What does it take to win? Matthew Haiken, President of Prestige Collection Auto Group, certainly knows. He runs the No. 1 Volvo dealership in the US, and he’s doing $300M in revenue from what he calls “throwaway” brands. You want to hear what he has to say.

Listen to the episodes here, and subscribe to the CDG Podcast on Apple, Spotify, or wherever else you get your podcasts. And thank you to Valvoline, Stream Companies, and CDK Global for making this content possible.

Together with Fullpath

Everything you know about building and marketing to audiences is about to change.

Real-time audience APIs are coming to Fullpath’s CDP. This means you can now stream your data-driven custom audiences directly to every marketing channel in play at your dealership—including Google ads, Facebook ads, email platforms, and more.

Here’s how it works:

• Build an audience using the hyper-specific filtering capabilities included in Fullpath’s CDP.

• Click to copy the audience API link.

• Implement the audience API link on your marketing platform and watch your audiences update in real time.

Register here for the Fullpath Q1 live launch on March 5 at 12 PM EST to get a behind the scenes look at their powerful new audience APIs and to learn how this data integration changes the face of marketing for the automotive industry.

Overheard at the Dealership

Let’s break down a deal: Because these EV sales are getting crazy. One of my followers just leased a 2024 Audi e-tron GT for $600…per month. Insane.

Why? Because this is a $110K vehicle...which means the buyer got a $36K discount. The specs: He put $8K down via trade-in, two-year lease, 10K miles per year.

Another dealer follower shared this great analysis:

Another case of floor plan costs skyrocketing? Or just a rogue deal as EVs head toward price rediscovery? Hit reply and share your take.

Highlights from the CDG Job Board

We’ve got tons of great jobs hitting the CDG Job Board right now. Here are some standouts for anyone looking for their next move.

• Fuse is bringing fintech to retail automotive in the US market, and they’re looking for a National Accounts Manager for sales to join their team.

• Finance leader? Automotive group Envision Motors is hiring its next CFO and the comp package on this one looks good. 👀 

• Veros is hiring for regional sales managers all over the country, from Oklahoma City to Seattle to Nashville.

Looking to hire? Add your roles today—it’s 100% free.

The Backlot

• The six major publicly traded franchised dealership groups ended 2023 with double-digit drops in new vehicle gross profit…thanks in large part to growing inventories.

• The Biden administration is reportedly considering easing back on parts of planned limits on tailpipe emissions, according to the NYT.

• Recent earnings suggest most of the big auto suppliers were able to absorb the shock from last year’s UAW strikes. Smaller suppliers, though, are in slightly hotter water.

• The US government has reimbursed auto dealers for about $135 million in advance point-of-sale consumer electric vehicle tax credit payments since the beginning of 2024.

• Used vehicle supply and average listing price both fell in January. We kicked off 2024 at 49 days supply and $25,638 average listing price.

Thanks for reading. Oh, and that Cybertruck I mentioned? It sold for $249,999. Keep in mind…in the Cybertruck’s order agreement terms, Tesla states, “You understand and acknowledge that the Cybertruck will first be released in limited quantity. You agree that you will not sell or otherwise attempt to sell the Vehicle within the first year following your Vehicle’s delivery date.”

We’re glad someone took the risk so we could see a $190K flip in real time. 😂

See you next week.

—Car Dealership Guy

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