Priorities are changing for car buyers, and if dealerships fail to keep pace, they will no doubt find themselves on a one-way street to obsolescence.

Historically, dealerships have always had a trick up their sleeve when selling new cars: they could negotiate prices, throw in a few extras, and make the customer feel like they were getting the best deal possible. Yet, with the emergence of the agency model and the OEMs’ direct-to-consumer practices, no haggle car buying—with transparent and consistent pricing—is replacing the old ways of doing business.

So, what do dealers have left to offer their customers? How can they continue to attract new car buyers to the dealership and differentiate themselves from competitors with similar offerings, often from the same brands nearby?

As the industry shifts towards a more transparent and customer-centric model, the emphasis increasingly will be on providing superior customer experience (CX). By showing a willingness and flexibility to adapt, dealerships can fully capitalize on this transformation.

By taking a closer look at the state of CX in the automotive industry and the huge incentives that traditional dealerships have to evolve, a roadmap to transformation should become clear.

Automotive trends and the backdrop of change

In the past, the automotive industry has been less eager to embrace digital transformation,lagging behind sectors such as retail. However, this trend appears to be reversing at a rapid pace.

Legacy brands are now confronted with competition from newcomers like Tesla and Rivian. These new competitors bring a digital-centric approach and mentality usually associated with technology firms.

As the traditional internal combustion engine gradually loses favor with legislators, the emergence of electric vehicles (EVs) is bringing new technological dimensions and altering the ways people purchase, operate, and maintain their vehicles. Furthermore, the rise of new rivals from China and the evolution of car rental firms into mobility service providers are reshaping consumer perceptions of their transport choices.

Additionally, as an increasing number of manufacturers now engage in direct selling to customers, dealerships are redefining their roles to focus on in-person customer interactions. These include facilitating test drives, conducting product demonstrations, providing product details and handling the delivery process during the sales cycle–without any authority over the actual sale itself.

Yet, if we look at transformation examples in other industries, auto dealerships can find some clear opportunities to stay relevant amid this generational change.

Incentives to adapt to no haggle car buying

In my experience with brands from other sectors, it’s evident that the most successful have been those who adapted fast, rapidly acclimatized, welcomed digital innovation, and capitalized on the prospects yielded by an evolving business landscape, not only in specific sectors but across industries. The best manufacturers have already pioneered this shift. They’ve transitioned from traditional distribution models to omnichannel strategies, blending online and direct-to-consumer in-store experiences to solidify their competitive advantage.

Automotive dealerships will stand out by being flexible and responsive to the industry’s evolving trends rather than clinging to traditional methods. By making customers the main priority and educating and supporting them to make informed choices around EVs, for example, they can significantly differentiate themselves from competitors.

Integrating digital channels for seamless CX is a crucial start, but automotive dealerships should not limit themselves to adopting technology to level up their in-house experiences. Amenities such as charging points and coffee shops can generate buzz. At the same time, expert staff—both in-house and online should focus on educating customers about new products without having to force a sale. 

Today’s customers value the quality of their experience, encompassing elements such as service, convenience, and brand interaction, rather than just being influenced by price benefits. These evolving consumer behaviors signify that providing an unrivalled customer experience becomes a primary unique selling point for dealerships.

Individuals looking for the best deals will find them, but as CX improves across the board, these deals will be clear and the same everywhere, online and with other sellers. This means customers are more likely to choose where to purchase based on how positive the buying experience is. As such, dealers should focus on supporting customers, making sure help is on hand whenever and wherever they need it.

Your roadmap to a no haggle car buying experience

Automotive dealerships looking to transition to a more CX-centric business model and to enhance the efficiency and effectiveness of their sales and service functions, need to pursue these four no haggle car buying changes:

1. For dealerships introducing new services like annual EV maintenance, establish dedicated teams for proactive outbound communication.
   
   
2. Set up “Experience Centers” or provide online support and information. This involves the formation of central teams that can assist in-house staff or directly interact with customers through the dealership’s online platform.
   
   
3. As profit margins in the automotive sector tighten, we anticipate a shift from isolated, local, self-contained teams in each location to more centralized operations, where costs can be optimized. You’ll need to consolidate elements of local teams across various dealerships with a single, larger team, reducing costs and enhancing sales efficiency.
   
   
4. Another critical area for growth is digital integration. You’ll need to architect digital customer journeys by implementing tools like live chat and knowledge bases on dealership websites, as well as ensuring CRM and chatbot integrations. 

Dealerships are on a transformative journey, and during times of industry disruption, you’ll need a clear vision for the road ahead. They face a pivotal moment as no haggle car buying becomes the norm, necessitating a shift towards a more transparent, customer-centric model focused on superior customer experience (CX).

To remain competitive, dealers must embrace digital innovation, integrate digital channels for seamless CX, and prioritize customer education and support, particularly around emerging technologies like electric vehicles (EVs). By adapting to these industry trends and focusing on providing an unparalleled customer experience, dealerships can differentiate themselves and thrive in the evolving automotive landscape.

Check out our Automotive CX Executive Report to learn more about the trends impacting the industry today.