Pub. 19 2020-21 Issue 4


NADA Director’s Message: What The COVID Pandemic Has Taught Us About The Future Of Auto Retailing

Recently retired National Automobile Dealers Association (NADA) President and CEO Peter Welch authored a column near the end of his tenure that I feel everyone should read. What follows is an edited version of Peter’s important message:

The coronavirus pandemic has taught everyone important lessons. One of the biggest is that the business of selling and servicing cars and trucks is essential to the safety and well-being of Americans. Our personal vehicles have proven instrumental in getting us through this pandemic. They’ve brought doctors, nurses and patients to hospitals, researchers to the lab, kids to schools (when schools are open) and all of us to the grocery store or other appointments.

As we wade through another spike in COVID cases, policymakers must remember that not every vehicle sale is a discretionary purchase. Tens of thousands of cars and trucks break down, get totaled in accidents or need to be scrapped every single day. Those that can’t be repaired need to be replaced, so auto dealerships MUST be able to conduct vehicle sales in some capacity.

This brings us to another lesson: Auto dealers are more willing to embrace change and disruption than most people give them credit for. In the early days of the pandemic, dealers quickly rolled out or expanded their digital capabilities to safely operate, remain compliant with local health regulations, and offer convenient and flexible access for customers that needed to purchase vehicles or have them serviced.

I am proud of the resiliency, innovation and determination that America’s franchised auto dealers have shown. Dealers see these adaptations as positive to their operations and their customer interactions, which is why I have no doubt that this innovation and flexibility will endure long past the pandemic.

Look no further than NADA’s 2020 Dealer Attitude Survey results, which received more than 11,000 responses when it was conducted in July. Dealers were asked what they thought about conducting business during the pandemic, what changes they felt were here to stay in a post-COVID world, and what changes needed to be accelerated to keep up with changing customer expectations. A vast majority feel several processes are here to stay, including digital sales (82%), home test drives/ home deliveries (73%) and home pickup and delivery for service appointments (65%). The pandemic accelerated customer adoption of fully-digital sales, but many still want to start the sales and financing process online and complete the transaction in the store.

NADA also asked dealers to evaluate the importance of six different aspects of the physical store in a post-COVID environment, rating them on a scale of 1-10. The most important aspect was location and convenience for customers, scoring a 7 out of 10. Size and capacity of their service center; co-location of sales and service facilities; on-premises customer amenities; and overall facility size were less important. Not surprisingly, OEM facility image programs ranked last.

For many dealers, factory image programs are costly and burdensome, even on good days. There is little evidence they have a positive influence on a customer’s buying experience. As the digital retail experience evolves, most dealers believe OEMs need to rethink their costly and ever-changing image programs to better align with consumers who place a far higher premium on flexibility and convenience.

Finally, NADA asked dealers to identify where they’d like to see their OEMs focus in the post-COVID world. The number one area was to simplify incentives to support digital retailing. Sixty-four percent of franchised dealers said this should be the top item their OEMs focus on to effectively embrace the change in customer preferences. The reason is simple: to be successful and credible with digital retailing, dealers must offer a sales process that is transparent to the consumer. OEMs should work to make dealership incentives as simple as possible.

Throughout 2020, dealers did a tremendous job working to meet their customers where they are comfortable — physically and logistically — and to provide those customers with the flexibility and transparency they need. Dealers will continue to do so. The services they provide to their customers — and the nation — are too important.

Rick Desilva Sr

Richard A. DeSilva, Sr., NADA Director

This story appears in Issue 4 2020-21 of the New Jersey Auto Retailer Magazine.