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Motoring
Are car salesmen and showrooms headed for the scrap yard?
With new options to research and buy a new or used car online, is the traditional car yard destined for the same fate as Blockbuster Video?
Just down the road from Brisbane airport, the future is under construction.
A hotel, restaurants, shops and a leisure centre are all part of the plan. And so are more than 25 car dealerships and a 2.3km test track designed by racing car champion Mark Skaife.
It’s called the BNE Auto Mall and its backers aren’t holding back on their expectations for the $1 billion project that’s due to open in 2024.
“BNE Auto Mall is the largest, most visionary, and eagerly-anticipated mixed-use development of its kind in Australia, and it will be a game-changer when it comes to the way in which people buy and experience motor vehicles,” claimed BAC CEO Gert-Jan de Graaff.
The Auto Mall is proof car dealerships aren’t going away, but they are evolving to meet the challenge posed by the internet.
The rise of online shopping has undoubtedly impacted on the way we buy cars.
Not that long ago the search for a new or used vehicle required endless schlepping through car yards and inevitably falling into the clutches of salesman along the way.
Sometimes the experience was satisfactory, sometimes not. There’s a reason car salesman traditionally rank down with politicians and journalists when it comes to perceptions of trustworthiness!
The $1 billion BNE Auto Mall will set the bar for car dealerships of the future when it opens in 2024
Avoiding the hard sell
If you wanted to avoid the hard-sell from the salesman, you probably trawled through the newspaper classifieds and went searching for a used car privately. That could be a perilous journey in itself.
Nowadays, thanks to the internet, potential buyers have much more knowledge and therefore much more power in the process.
We can peruse the market and decide what type of vehicle we are interested in, cross-shop the various brand offerings, narrow down to the vehicle we like and the equipment we want and the money we want to spend.
And thanks to websites like the one you’re visiting now, you can then read independent road test reviews to see what it’s like to drive.
All that before setting foot in a dealership. It certainly changes the power and knowledge dynamic.
“A lot of the people who come in are as informed if not more informed than dealer staff,” says Matthew Wiesner, the managing director of Sime Darby Motor Group Australia, which owns 10 retail sites for prestige brands such as BMW, VW and Volvo around the country.
“That’s fantastic because you know they are serious about buying a vehicle.”
Of course, you can go even further and cut the dealer experience out altogether. You can buy a new or used car off the web without ever seeing it in the metal.
Your first sighting and drive could be when you collect it. That’s how electric vehicle evangelists Tesla does it.
Or you could even skip that part of the process and have your purchase delivered to your door, sometimes with a guarantee that if you’re not happy you can get your money back.
Several recently-launched used car sites are dangling this carrot.
The buzzword
In the auto industry, this mixing of the digital and physical purchasing is called omni-channel retailing. It’s the buzzword of the moment.
It might also sound like retreat towards irrelevancy for bricks and mortar dealerships, but there seems little likelihood they will go the same way as video rental stores.
Until virtual reality becomes so immersive and impressive that you can touch, feel and test drive a car online, many buyers still feel the need to go to a dealer and check out their intended purchase in the-metal.
The primary reason that desire would dissipate is if we all abandon private ownership of motor vehicles and opt for pay-as-you-go shared mobility.
“Going to the full ‘everyone is going to buy everything online’ is not a reality we are going to see in our lifetime, given the emotive experience of a vehicle purchase,” says Matthew Wiesner flatly.
“Nothing is ever going to replace that live experience of sitting in a car, so an omni-channel customer experience is key.”
But while the test drive is a constant, much else is changing about the dealership experience. For instance, what the car companies like to call haggle-free pricing is seeping into Australia. Essentially, it means no discounting.
Both Mercedes-Benz and Honda have committed to this approach, swapping from traditional franchising to an agency structure. That means you are buying the vehicle from the car company - not the dealer where you collect it.
Benz and Honda argue the change is boon for customers who hate the traditional negotiating game with salesmen. But it also means they control the buying process from start to finish and therefore the money being transacted.
Agency is happening at the same time as the new car prices in Australia climb dramatically.
Brands are excising entry-level models from their line-ups and adding equipment. The cheapest Mercedes-Benz C-class went up $15,000 in one hit. It’s an extreme example but indicative of an industry-wide trend.
Dealerships of the future could feature hotels, restaurants and leisure centre to tempt buyers
More expensive, more service
Which brings us back to the BNE Auto Mall. It’s intended to be a more luxurious and all-encompassing experience for vehicle buyers. After all, if you’re going to pay more for a car then the justifiable expectation is for better service as well.
And the opportunities for dealers to do that certainly exist. Traditionally, their workshops have been their primary profit centre (moreso than selling the cars) as vehicles received their scheduled services.
Nowadays, that includes sophisticated diagnostics required to make sure all those computers that run modern cars are in working order.
Think about the complex infotainment systems in modern cars. Educating buyers in all the features they can access takes hours. Over the air updates will make that an ongoing relationship.
Down the road, the transition to electrification will require explanation and support. In terms of powertrains cars will become more similar – no more inline six-cylinder BMWs for example – which means someone’s going to have to be able to explain a brand’s unique value to potential buyers. Dealers clearly have a role to play in that.
The information provided is general advice only. Before making any decisions please consider your own circumstances and the Product Disclosure Statement and Target Market Determinations. For copies, visit racv.com.au. As distributor, RACV Insurance Services Pty Ltd AFS Licence No. 230039 receives commission for each policy sold or renewed. Product(s) issued by Insurance Manufacturers of Australia ABN 93 004 208 084 AFS Licence No. 227678.
