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Digital transformation

Technology Car Dealerships Need for Conducting Online Business

With car technology constantly evolving, it's time for dealerships to follow suit. This is why car retailers need to become more like tech companies.
Jennifer Gustavson
January 10, 2022
5 min

Even with modern updates to the car buying process, the entire model is ripe for disruption from research to resale. The tech revolution has spared no industry — why should car sales be any different? 

Why car companies need to be tech companies

For good reason, automobile purchasing has been an online-resistant retail sector whose tech adoption has lagged behind more commodified goods like books, clothes, and electronics. Cost of delivery, variability of product, and buyers' risk have been noted as reasons for the slow adoption. Still, all that is on course to change: in 2020, for the first time, we saw millennials outpace boomers as the largest demographic of new car buyers. All of that spells one thing— where millennials go, tech will follow. 

As millennials and Gen Z take over an increasingly significant market share, tech-supported buying will only increase. At every stage of the buyer journey, car dealerships in the coming years will either update, expand, or introduce tech tools to engage buyers who want their purchase process to be fast, convenient, and digital.

Online research

Online research has replaced a dealership visit as the first step in the car buying process. Consumer research shows that 92% of automobile buyers are now using online search to begin their car buying process before visiting a dealership. From quick Google searches and expansive Kelly Blue Book databases to sites like Carvana and Carmax, consumers turn to online research to educate themselves on what’s available, what car would be best for their lifestyle, and how the buying process works. Car dealerships that give a first-rate online experience will have a huge competitive advantage when consumers are contemplating their next car purchase.

Car technology

Automobile tech is on course to create a never-before-seen driving experience, and the dealership experience will follow suit. Automobile industry experts assign the evolution of car technology to four key areas: connectivity — car manufacturers and their partners are enriching the experience of car owners with best-in-class connectivity options; autonomous driving — self-driving cars have exited our sci-fi fantasies and are entering our home garages and highways; electrification — green and renewable fuel options have been a long-time-coming disruptor of the automobile space; and shared mobility — the rideshare economy and the rise of autonomous vehicles are transforming the ways we're traveling together. 

With all of the new technologies and capabilities improving the way cars are made (and driven), dealerships should be ready to embrace tech that supports the way consumers prefer to buy them.

Digital marketing

Digital advertising has become nearly the focus of auto manufacturers and retailers' marketing strategies. The value of the internet is the scalability it offers, and now that car buying is available as an online shopping experience, effective digital marketing is a massive growth factor when converting shoppers to buyers. The ease of market segmentation, the sophistication of data analytics, and the pervasiveness of social media are just a few of the reasons for this widespread adoption. Future-thinking dealerships should anticipate even more digital strategies beyond marketing, including those that enable the purchase process, such as e-signing and online notarization

Virtual showrooms

"Try-before-you-buy" is undergoing a massive makeover with the advent of virtual reality and augmented reality. In industries from real estate to cosmetics to travel, augmented and virtual reality experiences are helping customers to make purchase decisions, and car manufacturers and retailers are following suit. Automakers use virtual showrooms to showcase their new models, and dealerships may stand the most to gain from utilizing that technology. If you could eliminate the costly risk of a test drive, save gas money, and still give a customer on the other side of the planet the same rush of excitement from trying out your vehicle, wouldn't you?

As our world advances technologically and internet shopping advances with it, online car buying will continue to scale. Car dealerships that operate more like a tech company and embrace the digitization of previously in-person processes will stay competitive in a shifting market that increasingly favors the digitally savvy.

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Jennifer Gustavson

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