Pub. 19 2020-2021 Issue 1

N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S S P E C I A L E D I T I O N , 2 0 2 0 8 new jersey auto retailer President’s MESSAGE | BY JAMES B. APPLETON Auto Retailing Has Been Evolving For 100+ Years — Now Is No Different In the pre-COVID era, which seems like years ago and not just 4 months, many dealers were skeptical about online motor vehicle sales. Some dealers felt threatened by the disruption of doing more and more business online and were concerned about the potential impact it might have on their bottom line. For all the terrible things caused by the COVID-19 pandemic, one positive out- come is that it has shown dealers they can compete and be successful in the digital motor vehicle sales world. It’s also shown dealers that a growing number of cus- tomers are becoming more comfortable conducting the motor vehicle purchase process online. And, good news for the bottom line, it seems that dealer grosses do not suffer in a virtual transaction. In fact, there is some research that suggests many customers are willing to pay a premium for the convenience of an online transaction. According to a recent study by Autotrader.com, 62% of consumers say they are more likely to complete steps of the motor vehicle purchase process online, due to COVID-19. Some dealers have embraced the “new normal” and are jumping in with both feet. Others are dipping their toe in skeptical- ly. One thing is clear in the post-COVID world: dealers will need to build out their digital and remote retailing abilities and processes. And, fortunately, there are a growing number of excellent tools avail- able and more being developed all the time that will allow dealers to be more effective serving those customers who demand a remote or online experience. Your entire business isn’t going online tomorrow. But if even 5-10% of your cus- tomers are demanding an online and/or contactless vehicle transaction, you can’t afford to ignore them. And it’s more than likely that 5-10% will grow in the months and years ahead. Carvana, Tesla and others have been ag- gressive in their online and digital retailing for years. And while traditional dealers played by the rules, these so-called “dis- rupters” simply ignored NJMVC regu- lations and restrictions on digital and online motor vehicle sales. Not surpris- ingly, they were better positioned at the outset of the COVID 19 crisis to pivot to the new normal. Still, Tesla and Carva- na account for a miniscule percentage of the auto retailing market. Franchised dealers continue to sell the overwhelm- ing majority of new and used vehicles in New Jersey. And, with growing consum- er demand for digital and online vehicle sales, New Jersey’s franchised new car and truck dealers will adapt — as they always do — to meet new and changing customer expectations. But there are obstacles to online vehicle sales built in to the NJMVC title and registration process and in the NJMVC’s dealer licensing laws and regulations. Accordingly, NJ CAR is now taking the lead in working with the Legislature to develop a bill that will eliminate statutory and regulatory barriers that make a re- mote or online vehicle sale difficult or im- possible here in New Jersey. For instance, NJMVC regulations specifically prohibit licensees from engaging in digital and online sales activities ( like price negotiations and execution of transaction documents ) while customers are not present at the licensed dealership premises. Also, NJMVC re- quires a “wet” signature on documents and prohibits e-signatures. During the COVID crisis, everyone was given a free pass on some of these requirements. One could argue that Carvana and Tesla have been given a free pass from the get-go, as they have simply ignored all of these rules and regulations. The modus operandi for these disrupters is “it’s easier to ask for forgiveness than permission.” While NJ CAR would never be comfortable recommending dealers knowingly disre- gard existing rules, regulations or laws, we have repeatedly complained to the NJMVC about other business models that simply refuse to play by the rules. Auto retailing has been evolving and changing for more than 100 years. And that change is always spearheaded by customer demand and advances in tech- nology that allow dealers to serve their customers where they want, when they want and how they want. It’s time to eliminate outdated rules and regulations that hinder remote and online motor ve- hicle sales and to level the playing field for new car dealers that wish to play by the rules.