Automotive Sales Massive Decline: 7 Insights Uncovering the Real Reason Behind it

You can have the best car models in town on show, a stellar car sales team on the floor—no matter what you do, the figures at the end of the month don’t budge a cent.

The fundamental problem with such sales optimization strategies is that they overlook the underlying issue. We’ll explain.

Automotive consumers have evolved beyond recognition over the past decade. People used to differentiate brands based on their products. Now they do that based on the experience they receive across the entire customer journey.

Unfortunately, as buyers are evolving, the current automotive retail model is getting completely left behind in another era. The way many dealerships operate damages customer experience rather than enhancing it. In fact, only 1% of automotive consumers report to be “fully satisfied” with their car purchase experience.

To help you better understand the issue at hand, we explain how communication, organizational set-up, and retail channels are commonly misaligned with modern buyers, likely harming the customer experience and your sales figures.

You’re leaving another voicemail, yet the buyer has moved on

A huge issue for dealerships is not being able to get in touch with potential buyers and current customers. We’re more connected now than ever before, so why is it so hard?

Consider this scenario.

1. John wants more information on a car you’re selling and fills out a contact form on your website.
2. 20 minutes later, Gary from Sales calls John.
3. John’s doesn’t pick up.
4. Gary leaves a voicemail.
5. Gary sends John an email.
6. Susie from Sales follows up with another voicemail and email a few days later.
7. John never replies. John’s gone AWOL.

There are multiple issues here.

1. Delayed response times. 20 minutes may not seem like a long time to wait for a reply, but for the current generation this can make or break a relationship. 20 small minutes could be the difference between making or losing a sale.
2. Generic messaging. Most BDC and Sales teams don’t have the time or information to write personalized responses to every single potential buyer. Typically, they reply to every query with the same, generic response, which will likely alienate buyers.
3. Outdated outreach method. Phone calls are going quickly out of fashion. Stats show that less than one out of four phone calls from an unfamiliar number gets answered.

Consumers expect speed, quality, and convenience. They communicate with businesses in the same way they do with friends and family. They shoot a casual text, email, or direct message via social media and want an instant response. Anything else can feel inconvenient and outdated.

Your organization is vertical; but buyers are horizontal

Consumer-brand relationships are becoming more like personal relationships. Consumers expect brands to know what they like, to give good advice, and a consistent experience every time they interact.

Consumer tech companies like Uber and Amazon are considered “best-in-class” for customer experience for a reason. When buying from Amazon, consumers can do everything in one place, from researching and purchasing to returning items and leaving reviews. Amazon guides them along the way by making recommendations and delivering an intuitive platform that gently pushes them from one step to the next.

When buying a car, the story plays out very differently. Automotive consumers encounter friction at every stage of the customer journey, from purchase to post-sale. They have to speak to a different person or team nearly every time they communicate with the dealership. They may have to explain who they are and what they want to a perfect stranger, time and time again.

This is mainly down to the siloed structure upon which the car industry and car dealerships are built. According to 41% of customer service professionals, organizational silos are “the biggest hurdle to customer experience.” They’re holding dealerships back from creating the consistent experience customers want.

At the dealership, each department from sales to service operates with its own processes and goals with minimal or zero interaction or information sharing with other teams. In the sales pipeline alone, there’s the marketing team for lead generation, BDC for lead nurturing, perhaps another team for converting leads into appointments, the sales team on the dealership floor, and more.

When you think of all the departments that customers contact—sales, finance, customer service, and more— that’s a lot of different people to talk to and a lot of opportunity to frustrate would-be buyers.

You’re on the dealership floor while your buyers are in the cloud

The car purchasing journey used to look something like this:

A potential buyer walks into your dealership to see what you have on offer. They speak to your salespeople, who show them cars that fit their requirements. They head to a few of your competitors’ to do the same thing again. They might come back to you for a test drive and, eventually, to sign the dotted line. All of this happens in close collaboration with the dealership.

But this is no longer how people shop for cars. And you can thank the internet for that. The internet has transformed the way people shop for a car, including the channels they use and their shopping behavior.

A significant McKinsey study that looked at auto retail trends in the US, Germany, and China reveals that an increasing number of people use online channels to complement their interaction with the physical dealership during their car buying journey. The study reveals that 80% of consumers now use online channels when gathering information and weighing up their options. Consumer behavior that involves online and offline touch-points is what’s known in the business as omnichannel shopping.

Let’s meet some omnichannel shoppers McKinsey identified in the above study. First up, “the hybrid customer.” They represent a third of car buyers. When looking to buy a car, they use a combination of online sources as well as the dealership. When testing out their options, they like to visit the dealership to get the real driving experience. Second, “the online-savvy modernists.” They rely more heavily on the internet. They tend to gather information and compare their options exclusively online and only visit the dealership to close the deal.

But when these modern consumers want to buy a car, often they can’t do it the way they want. This is because the automotive retail journey at most dealerships is still geared toward the older generation, who tend to shop offline.

Your dealership’s survival rides on your ability to adapt

There’s no question: the current retail model and its parts is out of sync with the new generation of consumers.

And the risk isn’t limited to driving customers away and hampering sales in the short term—there are potentially grave long-term consequences. If dealerships fail to create the experience customers expect, McKinsey predicts that this generation will stop buying cars altogether.

Shifting the focus to customer experience is crucial not only for sales now, but also for the survival of your business and the automotive industry as we know it.