Retail Forum panelists: Succeeding in digital future will require teamwork

Dealerships and automakers will need to work together as the auto retail industry emerges from the pandemic into a digital future, leaders of two dealership technology companies said.

Joe Tautges, COO of CDK Global Inc., and Alex Vetter, CEO of Cars.com, highlighted the need for greater collaboration between automakers and their franchised dealerships during an Automotive News Retail Forum: Dealer Discussions panel last week. Both parties, they said, will need to play a role in building on the e-commerce framework that was established last year when the pandemic forced many dealerships to shut their physical showrooms and sell vehicles online.

"The other thing that we also need is more investment coming from the OEMs directly into helping dealerships do more digitally," Vetter said. "The more that we can work together as a collective to drive towards digital outcomes, we know that customers are going to be satisfied and enjoy the car ownership experience for decades to come."

The industry continues to face challenges from the coronavirus and a shortage of microchips that has slashed vehicle production globally while consumer demand has stayed high. In addition, automakers plan to bring more electric vehicles to the market in coming years, which will require dealerships to adapt their sales and service strategies.

And some dealers are exiting the business, prompting a wave of consolidation that has large public dealership groups adding stores and extending the reach of their own digital sales tools. Yet the opportunity for the industry is to invest in digital platforms and bring those technological capabilities to smaller stores that don't have the scale of larger groups, Vetter said.

"The great secret is that the dealerships that embrace technology can be just as big as the biggest players in the game," he said. "And technology is an enabler, and it allows the single-point store to do anything that the larger players can do."

Automakers and dealerships will need to work together on that digital transformation, including revisiting requirements for brick-and-mortar showrooms, Vetter said. Digital showrooms are where future market share gains will happen, he added.

Dealerships are starting to think differently about how they can use space, Tautges said. On the fixed operations side, vehicle pickup and drop-off services can lower overhead costs, create efficiency and provide a positive consumer experience, he said. They also could allow dealerships to build service departments in less expensive locations.

On the sales side, more dealerships are beginning to follow consumer expectations toward a modern, seamless experience that could allow a buyer to start a purchase at home or inside the dealership on an iPad, Tautges said. Regardless of where a consumer buys a vehicle, the experience is evolving to give them more choices about how they buy it, he said.

"What they're not looking for is a fragmented in-store experience that allows them to get handed off group to group," Tautges said. "It's much more a consultative, welcoming and assistance process from beginning to end."