The jump in online car sales is partly due to consumers doing more online during the pandemic. Automakers have responded by accelerating their existing plans for digital sales.
General Motors launched a website years ago where customers could find, customize and order a vehicle, but by the end of spring 2020, traffic had increased by 50 percent. The automaker has since said it will allow customers to shop, buy and finance their vehicles entirely online and even have the car delivered to their home. Electric vehicles fit that strategy better than gas-guzzling ones, says Hoss Hassani, GM’s vice president of the EV Ecosystem. Battery-powered vehicles have fewer parts, while the company’s electric vehicles have a modular design, reducing the number of options offered. This makes it easier for customers to customize the car and pre-order online, he says.
Honda, which aims to sell only electric cars by 2040, said its entire electric Acura lineup will be sold online in the US. “We see it as a convenient tool that basically meets the expectations of customers in terms of how they buy their car,” said Mamadou Diallo, senior vice president of sales at American Honda, at a media event last month.
CEO Jim Farley said last summer that Ford is also committed to a more streamlined online shopping experience. “We have to move to a non-negotiable price; we have to be 100 percent online,” he said, envisioning a future in which factories no longer send machines to wait on lots, which is more common in Europe. “It goes directly to the customer — 100 percent remote pickup and delivery.” Ford is also launching an ambitious program for dealers interested in selling electric equipment that will require those who sign up to spend between $500,000 and $1.2 million on site upgrades, including installing and operating on-site fast chargers.
Clear talk like Farley’s makes dealers a little nervous. This raises the specter that dealerships will be relegated to sales processing and delivery operations that also repair vehicles. Some worry that the ultimate goal of the changes automakers are making to their electric vehicles may be to become more like Tesla — ditching the dealership model altogether.
The changes in car sales could come as a shock to some dealerships, which have enjoyed record profits during the pandemic during a period of high demand for a limited supply of cars. “Dealers still have the mindset of, ‘Walk in and shake my nice salesman’s hand,'” says Mike Anderson, president of the Rikess Group, an auto sales consultancy. Selling fixed price online requires a whole new skill set: facilitating digital transactions, explaining new features online or over the phone, and finding a way to build relationships with customers without meeting in person.
Many dealers are somewhat insulated from the dire winds of digitization. In most US states, dealership business models are protected by the force of law and well-resourced state and federal dealership lobbies. Seventeen states ban direct sales to consumers by automakers, while nine others restrict them, according to the Electrification Coalition, an advocacy group. Tesla and upstart electronics companies Rivian and Lucid have pushed state lawmakers to revise those laws, which date back to the 1950s, without success.