Inside the industry: Do we still need car dealerships?
During the pandemic, it seemed the dealership's role would be in permanent decline
Digital car buying accelerated during the pandemic, but buyers still prefer face-to-face contact
Who needs car dealerships? A provocative question, of course, but pertinent. Back in the day it took multiple trips to a retailer in order to research, compare and buy a new car. Statistics suggest that the average number peaked at around seven in the 1990s, fell to three in the 2000s and now hovers somewhere between one and two.
The reasons for the decline are pretty obvious: chiefly, the internet has made traipsing around an unnecessary chore, but it must also be a factor that cars are consistently better than ever (lessening any risk of buying a lemon) and the soaring complexity of model line-ups (especially before new emissions regulations simplified things) meant dealerships would often struggle to have the model or trim you wanted available for a test drive anyway.
Those realities combined with trusted third-party reviews being an online click away, often complete with a pre-haggled discount available, too. Meanwhile, manufacturer websites continually improved and now almost always include the chance to spec and pay for your car online, as well as offering a variety of live chat and video services to give personalised tours of vehicles. Impressive though modern dealerships are, the convenience and quality of these digital services has been hard to resist.
Digital developments were accelerated in the pandemic, when visiting a dealership was, at times, impossible, but when (before we all knew what a semiconductor was) car sales boomed. For a while it seemed as though the dealership’s role would be in permanent decline – and, of course, this is one reason why manufacturers rushed towards agency sales.
But here’s the kicker: research and purchase are very different things – and the vast majority of buyers still want to do the latter in person. Hence, of course, that dealership visits figure sits around (but above) one; it’s clear where the majority of people still want to sign on the dotted line.
While online research has soared, purchase intent hasn’t just stagnated but dropped dramatically. Figures from What Car? (for full disclosure, from the same stable as Autocar’s publishers) back this up: last June, 9.7% of respondents said they expected to buy a car entirely online; right now, that figure has more than halved, to 4.2%. In the same time period, the number of people who said they’d be comfortable buying a car online fell from 49.9% to 41.1%. The trend is clear – and a testimony to the enduring popularity of buying in person.
It might switch again, of course: In the post-pandemic world attitudes change quickly, and the fact that 10 times as many people are open to buying online as actually expect to do it shows the scale of room for change. But, for now, the reality doesn’t meet the hype. Dealership footfall may be in decline, but the retailer remains the linchpin and dealerships are where the majority of new car sales are done.