Contrary to popular belief, millennials don’t hate cars.
They hate car dealerships.
But the pandemic has pushed car dealers to step up online
sales, eliminating what millennials (and others) dreaded: showroom visits that
averaged five hours, haggling, paperwork, and high-pressure pitches for add-on
products like wheel and tire insurance.
اضافة اعلان
Millennials were presumed to dislike cars because — thanks
to alternatives like
Uber and Lyft — they often delayed getting a driver’s
license. Financial strain and difficult job markets (the Great Recession and
the just-now-fading pandemic set back careers) delayed car-buying even longer.
But in 2020 millennials bought more new cars in the US than
any other age group, accounting for 32 percent of total new-car sales, edging
baby boomers for the first time, according to JD Power, the market research
firm. And those millennials were nearly twice as likely as boomers to shop for
and buy a vehicle — new or used — entirely online, according to Cars.com, which
outfits dealers with technology for online sales.
Millennial financial clout, disdain for dealerships and the
pandemic have converged to shift how cars are sold, which may benefit car
buyers and dealerships alike beyond the pandemic.
The transition makes it a hot market for online car-buying
services and software platforms, such as Cars.com, which went public in 2017;
Shift and Vroom, which both went public in the past year; and Carvana, whose
stock has gained more than 200 percent since March 2020. Many more services are
emerging, like CoPilot, Gettacar, CarBevy, CarSaver, and Joydrive, some of
which are backed by big-name venture capitalists.
Even with the rising number of services, there is vast room
for growth, said Toby Russell, a co-chief executive of Shift, which sells used
cars.
“It’s not Shift, Vroom, and Carvana against each other,” he
said. “It’s Shift, Vroom, and Carvana against the other 99 percent of the
market.”
The new-car market is estimated at a third of the used
market or less.
Tesla sidestepped traditional regulation by owning all of
its dealerships. That allows it to sell cars directly online and in its stores
because there are no mom-and-pops to threaten. In states where it could not
sell directly at all, like Michigan, it had customers take delivery in a
neighboring state. Tesla did not respond to a request for a comment.
More established manufacturers face thornier barriers to
online sales. Dealerships can sell online, but not manufacturers. Individual
dealerships often license software platforms on their own, and the resulting
websites work and look different from one another, even within the same brand —
which may not be good for the brands.
General Motors took steps towards standardizing dealer sites
with its “Shop. Click. Drive” program, introduced in 2013. It inspired
headlines such as “GM ‘Shop-Click-Drive’ can eliminate showroom visits” in USA
Today. It did not meet that lofty ambition, but GM may be edging closer to what
the industry calls an “end to end” transaction.
That is the holy grail of online car sales, encompassing
shopping, purchasing, offering incentives, handling trade-ins, financing, and
selling insurance in one transaction entirely online.
“We are very close to doing that,” said Amrit Mehta, who
leads GM’s global web efforts.
GM will unveil a new site for its Bolt electric cars, which
will be Chevy’s most advanced online sales website, he said.
“We find that customers who buy EVs are adopting new ways of
buying, and that is where we see the greatest opportunity,” Mehta said.
The test drive — which made dealerships unavoidable — has
been replaced with what might be called test ownership: a tryout period with
easy returns. Carvana’s return policy appealed to Jessica Minnen, who is 39 and
lives in Denver.
“You can drive it up to a certain number of miles and still
return it if it’s not working for you,” she said. “I have not had great
experiences going into car dealerships as a woman solo. I don’t want to be
talked down to."
Carvana allows vehicles to be returned for free within seven
days and 965km. Similarly, Vroom offers a seven-day or 400km tryout.
Carvana delivered Minnen’s 2012 Subaru Impreza, took away
her 2003 Subaru and signed the final paperwork in her driveway.
“It felt very clean and safe,” she said.
Online sellers have allayed buyer concerns by including a
warranty in a used car’s purchase price. CarSaver includes a lifetime warranty
with no deductible on new and used cars. Gettacar, a used-car platform
exclusive to the Mid-Atlantic, includes a one-year, almost 20,000km warranty in
its price and offers a discounted extended warranty.
Many of the platforms aim to foster dealer loyalty. GM’s
phone app monitors a car’s health and tells owners when to take it to the shop.
“We are looking at this as an ownership experience,” Mehta
said.
CoPilot, a startup, offers “car-buying tools for people who
don’t understand cars,” said its chief executive, Pat Ryan. It will track
recalls and remind owners when it’s time to rotate tires or perform routine
maintenance, Ryan said.
Some dealerships pick up and return cars requiring service,
which reduces the need for expensive showroom complexes on major thoroughfares.
If deals are done largely online, stored cars could share space with shops on
cheaper land, offering tremendous savings and potentially boosting dealership
profitability — a diminishment of dealerships that benefits even the
dealerships.
Millennials may be spurring the trend to online purchases,
but the platforms say other generations have quickly jumped on board.
“My 78-year-old mom had no idea she could buy a car without
going into a dealership,” said Doug Miller, the chief revenue officer of
Cars.com.
Her 2020 Moonbeam Beige Lexus RX 350, bought on her son’s
platform, of course, was delivered in May 2020.
“She liked buying the car in her driveway,” he said. “I
don’t think she would want to go back into the dealership.”
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