Automotive retail in a post-coronavirus world

19 May 2020

19 May 2020

Coronavirus (COVID-19) has changed the face of retail. With shops shut, consumers are loading up online baskets instead of shopping trolleys. But how has automotive retail been impacted? Autovista Group Daily Brief journalist Tom Geggus considers whether COVID-19 is a catalyst for change for the world of car sales.

While dealerships across the majority of Europe were unable to sell vehicles under COVID-19 lockdown, online platforms remained open for business. While registrations have been down massively, virtual showrooms have provided an opportunity for browsing, researching and contemplating purchases. This then opens the door for further consideration of online platforms, and how they might change the car sales landscape once recovery does begin in earnest.

In April, Ipsos conducted a survey to uncover how COVID-19 has impacted automotive purchase and usage behaviours. The sample consisted of roughly 1,000 people from 11 countries, including the US, China, Japan, Brazil, Russia, India, Germany, France, UK, Italy and Spain. The results revealed the majority of respondents are interested in completing vehicle-related tasks online. A total of 56% of people intending to buy or lease a new car said they were interested in doing so online.

Of that group, 45% said they would prefer an app or website provided by a local dealer, 31% said they would prefer getting this service from a car manufacturer and 16% said they would opt for an independent company. Some 85% of those interested in purchasing or leasing online went on to confirm they are also open to door-to-door test drives and delivery services.

‘The main technological development that I expect from COVID-19 is in within online sales’, said Andreas Geilenbrügge, head of valuations and insights at Autovista group’s Schwacke. ‘This will get a push now on the OEM side as well as from dealerships and they might try to compete in this.’

New-car sales

Manufacturers are taking note of online shopping trends, moving to offer expanded click-through reservation systems and online purchasing platforms. Citroen leant heavily into online sales with the Ami, its new two-seater electric city car. ‘Ami is part of a 100% online customer journey, which is intended to be easy and smooth,’ the carmaker said earlier this year. This gamble looks like it could pay off as the carmaker saw 200 sales after just a few hours of opening orders in France.

At the start of May, Renault UK unveiled its new online stock-reservation tool. Both car and van customers are able to select their desired model, click through a list of suitable vehicles, then decide on specifications and colour options. An online showroom provides a virtual tour around chosen vehicles, including the new Zoe, Clio, Captur and Kadjar models. After completing their reservation, buyers are then contacted by their chosen dealer who sees them through to delivery.

‘The online stock-reservation feature is a new addition to our comprehensive set of digital tools and helps buyers get the car they want without the need to physically visit a Renault retailer,’ said Adam Wood, marketing director at Groupe Renault UK. He argued that as customers can specify what they want, then complete their purchase with a dealer from home, the relationship between retailers and customers is maintained.

In April, Volvo Cars launched an online sales platform it is calling the ‘stay home store’ (SHS). Customers in Germany, France, Italy, Spain, the Netherlands, Belgium and the UK, can now use the system to buy or lease a new car online. SHS leverages the carmakers’ existing online sales tools, allowing customers to browse and choose from a series of models.

‘We want to give customers the option of finding a new Volvo that suits them, without having to wait for the current pandemic to be over,’ said Lex Kerssemakers, global head of commercial operations.

While car prices and leasing rates are pre-negotiated, to reflect the current economic climate, Volvo is offering additional flexibility options like payment-free loan periods. The manufacturer is making the SHS offer available on three models in each country, with expectations to introduce the platform in more markets going forward.

Used-car retail

In March, the UK online used-car retailer Cazoo confirmed it raised £100 million (€111 million) in further funding. The company has built up over £180 million (€201 million) in funds since its creation in 2018. Operating entirely online, it reportedly generated over £20 million (€22 million) in revenues in its first three months.

‘Our mission is to deliver the best experience for car buyers across the UK by delivering better selection, value, convenience and quality,’ said Alex Chesterman, founder and CEO of Cazoo. ‘That mission is now also focussed on keeping consumers safe by not having to leave their homes to buy a car.’

Part of Cazoo’s mission is to make buying a car no different from purchasing any other product online. Customers can pick from a range of makes and models, taking 360-degree internal and external tours of the vehicle before having it delivered to their door in as little as 72 hours. The company has also adjusted its delivery handover process to factor in safe distancing.

In the world of B2B remarketing, severely restricted physical operations have left dealers largely unable to buy stock, meaning consignors’ inventory has built up. Meanwhile, the dedicated online provider ADESA UK has seen record levels of interest on their site. Operating online has allowed the company to continue functioning, with vehicles available for sale throughout the pandemic.

Its platform allows the company to operate with high levels of efficiency. It can get a vehicle from appraisal to being ‘sale-ready’ within around 30 minutes. The unit itself can be located anywhere, as the company doesn’t need to physically possess it. The car’s condition is described virtually instead. This rapid turnaround means reduced logistics, inspections, stocking and depreciation costs.

Jonathan Holland, managing director of ADESA UK, outlined his belief that a paradigm shift is taking place within remarketing as part of COVID-19’s impact. ‘The way vehicles are remarketed, buyers will naturally seek to look at online processes due to social distancing,’ he told Autovista Group. ‘Social distancing is not going to go away very soon.’

As a consequence, he believes buyers will start to source more of their inventory online, becoming far more comfortable with making transactions digitally. Mirroring wider society as this behaviour becomes routine, service users will be able to appreciate the benefits created by online remarketing platforms.

So while COVID-19 might be the spark that ignites increased interest in online car sales across the board, what will keep the fire burning is growing acceptance through routine use. Eventually, this promises to make buying a car online as routine as ordering any other item from a browser and having it arrive at the front door.

Contributors to this article include: Christof Engelskirchen, chief economist at Autovista Group and Andreas Geilenbrügge, head of valuations and insights, Schwacke Germany.

Autovista Group’s latest thinking, insight, and data on the coronavirus pandemic and its impact on the automotive industry can be found here. Be the first to know when we publish something new - sign up to the Autovista Group Daily Brief.