The Presidio Group on October 28 sponsored an econference to address the question “How will we really buy a car in the future?” Moderated by Brodie, we asked the opinion of three experts with distinct points of view: Cox Automotive CEO Sandy Schwartz; Lithia Motors Senior Vice President and Chief Innovation and Technology Officer George Hines; and EY’s Global Future of Mobility Leader John Simlett.
The answer, it seems, is that the future car buying experience will be a personalized online experience. Dealerships will still have an important role to play but they must make important adaptations in how they operate and how they interact with customers.
COVID-19 was a digital retail accelerator for dealerships. The step-by-step adoption of online sales technology was compacted into a few weeks. And though restrictions on going into dealerships have been lifted, people’s shopping habits were forever changed by the pandemic, said John Simlett. In a global EY survey, 46% of those surveyed said they were determined to now shop online. Those consumers had reappraised “the importance of time” and they didn’t feel that the best use of their time was necessarily “going into a car dealership,” he said.
As consumers have shifted much of their buying online, they have become accustomed to convenience and personalization. They expect that when they purchase a vehicle. Consumers also expect more honesty and authenticity when they shop, and they are scrutinizing and doing more comparisons, said Simlett.
Consumers’ expectations were already evolving rapidly even before the pandemic, said George Hines. Removing friction in the online process, and improving the customer experience, is “the number one priority in remaining relevant to consumers,” he said.
That means dealerships have to do more than just invest in digital tools and implement services such as doorstep delivery. Dealers must become experts in what they sell, answer questions in five minutes, and deliver information to consumers in a way that they can “make a choice on their own,” Hines said. “One thing consumers enjoy is that they are in control (now).”
Many consumers still want to go into the dealership at some point in the purchase process, said Sandy Schwartz. Dealerships must offer the “particular pieces” that consumers want online and offline. “COVID has really put the pressure on us,” he said.
The sudden move to digital has created a need for new technologies in the wholesale and retail automotive realms. “We need to get better at explaining our products,” said Schwartz. That means better photos of vehicles online, more thorough condition reports for both wholesale and retail units, and emerging technologies such as virtual reality, which is already being used for some test drives, said Schwartz. It means technology that can detect a tiny ding in a car or allow a shopper to listen online to a car’s engine running to determine how the car has been driven.
It also means anticipating consumer needs “at their moment of need,” said Hines. For example, some banks offer an instant value for a consumer’s current vehicle if the consumer is looking for credit. Dealers must consider working with businesses outside their own world, he added.
Dealerships need a “highly responsive call center” and a “consultative” sales center that can make the consumer “smarter about the purchase they are making,” Hines said.
Integration of all a dealership’s systems is a hurdle that needs to be overcome, said Simlett. Currently, he said, many dealership systems aren’t integrated properly and “the way they think about and use data will be key.” Data can help dealerships gain the right customer insights and deliver the best customer experience, he said.
Personalization is key to the car buying process going forward, all the panelists agreed. “We shouldn’t see customers as a homogenous group,” said Simlett. The approach should be “do it for me and with me, not to me,” he said.
Lithia’s Driveway platform, which allows consumers to buy and sell cars online and schedule at-home service, lets a consumer choose how to interact with a dealership, said Hines. Whether it is because they don’t want to haggle, or perhaps are credit challenged and don’t want to come into a dealership, Driveway offers consumers “flexible solutions to meet those needs, no matter where their needs are,” he said.
The growing digitalization of the auto retail process is “a big win for consumers,” said Hines. And while it may seem like dealerships are losing control of the purchase process, he saw it differently. “There is no one else out there better positioned to help consumers manage the entire lifetime of (vehicle) ownership,” said Hines.
Based on EY’s survey findings, consumers are ready and willing to make the shift to online. The biggest hurdle Schwartz saw is people. “We still have a lot of people in the industry who are not believers,” he said. “That will determine the winners and losers.”
The Presidio Group is working with firms in the automotive retail services sector with technologies that enable dealerships to offer key portions of a seamless end-to-end online retail experience. We agree with our panelists that digital retailing is the future and dealerships need to be investing in the tools to provide customers with a frictionless online sales and service experience.
We also work with dealerships and dealership groups to find the right buyer, raise capital, and make acquisitions. This year has been one of our most active to date. We have sold 37 dealerships in transactions of more than $2 billion.
The need to invest ever-larger amounts in a digital customer experience does weigh on some dealers, and we expect it to be a driver in decisions to sell going forward. For others – those with the necessary resources – this will represent an opportunity to grow.
Founder and CEO
Mr. Cobb founded The Presidio Group in 1998 with the simple goal of bringing transparent advice to entrepreneurs and the lifecycle of their wealth building process. To that end, he formed three different business groups within Presidio to address each part of that lifecycle: private equity, investment banking, and wealth advisory. The firm grew to 70 employees in three offices (San Francisco, Dallas, and Washington DC) until 2016, when Presidio was reorganized and the wealth advisory business was merged with a similarly-sized RIA in New York called Tiedemann Advisors. Today, Tiedemann is one of the nation’s largest RIA’s with over $20 Billion in assets under management. Mr. Cobb is a significant shareholder and sits on Tiedemann’s Board. In the 2016 reorganization, Presidio also spun out its private equity group while retaining an economic interest.
Prior to Presidio, Mr. Cobb was with Montgomery Securities, First Boston Corporation, and Security Pacific Bank. He earned an M.B.A. from the University of Texas and B.A. degree from Tulane University. He competed for a spot on the US Olympic Team in 1988 and still races sailboats and bicycles and lives in San Francisco.
George shares oversight of the firm’s M&A and corporate finance activities and manages the Atlanta office. George is a seasoned automotive industry executive with over 20 years of experience in automotive retail, M&A, and real estate development.
Prior to joining Presidio, George spent over 18 years as an executive at Asbury Automotive Group (NYSE: ABG), helping to build it into one of the largest automotive retailers in the U.S. He most recently served on Asbury’s executive team as Senior Vice President of Corporate Development & Real Estate and managed hundreds of M&A and real estate transactions as well as many of Asbury’s strategic sourcing initiatives. George began his career at Arthur Andersen in its transaction advisory services group where he provided M&A advisory support to private equity and strategic buyers across many industries including automotive retail. George graduated magna cum laude from Seton Hall University with a B.S. in accounting. He lives in Atlanta with his wife and two children.