The surge in online auto sales is due in part to consumers doing more online during the pandemic. Automakers are responding to the moment by accelerating existing digital sales initiatives.
GM launched a website years ago that allows customers to find, customize and order vehicles, but by late spring 2020, traffic to the site had surged 50%. Since then, the automaker says it will enable customers to shop, purchase and finance their vehicles entirely online, and even pick them up at home. Hoss Hassani, GM’s vice president of the electric vehicle ecosystem, said EVs fit in better with that strategy than gas-powered ones. Battery-powered cars have fewer parts, and the company’s EVs are modular, reducing the number of options on offer. This allows customers to customize cars more directly and book them online, he said.
Honda, which aims to sell only electric vehicles by 2040, said its entire Acura electric lineup will be sold online in the US. “We see it as a convenience tool that basically does what the customer expects when they buy a vehicle,” Mamadou Diallo, American Honda’s senior vice president of sales, said at a media event last month.
Ford is also working on a more streamlined, Internet-based buying experience, Chief Executive Jim Farley said last summer. “We have to have non-negotiable prices; we have to be 100% online,” he said, envisioning a future where factories no longer have vehicles waiting in parking lots, an arrangement more common in Europe. “It goes straight to the customer — 100 percent remote pickup and delivery.” Ford is also rolling out an ambitious program for dealerships interested in selling electric vehicles, which will require sign-up dealers to spend between $500,000 and $500,000. $1.2 million for on-site upgrades, including installation and operation of on-site fast chargers.
Talks like Farley’s can understandably make dealers a little nervous. It raises the specter of dealerships being relegated to running sales processing and delivery facilities that also do auto repairs. Some worry that the ultimate goal of the automaker’s transformation around its electric vehicles could be to become more like Tesla — bypassing the dealership model entirely.
The shift in auto sales could send a shock to some dealers that have generated record profits during the pandemic amid strong demand for vehicles in limited supply. “Dealers still have this mentality of, ‘Come in and shake my handsome salesman’s hand,'” says Mike Anderson, president of the Rikess Group, an auto dealership consultancy. Selling online at fixed prices requires a whole new set of skills: Facilitating digital transactions , explain new features online or over the phone, and find ways to build relationships with customers without face-to-face.
Many dealers are somewhat shielded from the chilly winds of digitization. In most U.S. states, dealership business models are protected by law — and by well-resourced state and federal dealership lobbies. According to the advocacy group Electrification Coalition, 17 states prohibit automakers from selling vehicles directly to consumers, and nine other states restrict automakers. Tesla and newer electric entrants Rivian and Lucid have pushed state lawmakers to reconsider these laws dating back to the 1950s, with little success.
