COVID-19: Can Online Sales Save Dealers?

Car dealerships are enclosed retail spaces where a lot of people meet, so in a time of pandemic the risk of spreading the virus is high. It’s easy to understand why their showrooms and offices closed when COVID-19 started to hit the country.

Now that the peak is seemingly behind us and many car dealers have reopened, we can’t help but wonder if things will ever get back to “normal,” with as many customers making on-site visits as before.

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What about online sales? It’s like the saying goes: necessity is the mother of invention.

Time to Go Big

Of course, a few automakers were already doing business online before the coronavirus pandemic. Tesla and Genesis come to mind, allowing people to buy cars without going to a dealer. However, these are much smaller players in the auto industry than the likes of Toyota, Ford or even Mazda.

Can mainstream companies that sell hundreds of vehicles and make just a slight profit on each one consider this a viable option? Are we all going to shop for cars like we do with other stuff on Amazon?

Serge Beaudoin, president of Force Kia which owns three dealerships in the Quebec City area, is among those who want to rise to the challenge. During the government-imposed lockdown, around 30 of his employees worked to develop and implement a new online retail platform, virtually connecting customers with sales representatives.

If a customer wishes to do a test drive, they can have the vehicle brought to their driveway in compliance with the new health and safety measures prescribed by authorities. If they have a trade-in, they can send detailed pictures and the representative will appraise the vehicle and respond with an offer. Buying is just as simple: the car will be delivered to their home where the customer can fill and sign the sales contract “on a folding table or chairs, if necessary,” explains Beaudoin.

Without providing exact numbers, the Force Kia president says the new online retail experience has helped sell “lots of vehicles” so far. He plans to maintain the service even after this nightmare is all over.

Jean-Bernard Tremblay, president of L’Ami Junior, a group of GM, Toyota, Nissan and Mazda dealers in Quebec, also used the opportunity to develop online sales via a brand new system.

Visitors to the website are greeted by a sales representative paid hourly and not by commission. For test drives, they can schedule a date and time online, go to a designated parking lot area and then retrieve the key from a smart lock box. When they’re finished, they just have to put the key back in place.

After a customer agrees to purchase or lease a vehicle, someone from the dealership takes care of delivery and disinfection at home using a dry steam cleaner.

“The success we’ve had so far is undisputable,” Tremblay says. “People were ready for something like that, and even after the crisis is over this online sales model will continue. I expect it to represent 20-30 percent of our sales going forward.”

To be clear, the initiatives by Force Kia and L’Ami Junior are the work of dealers and not the manufacturers. Tremblay told us that many other companies have reached out to him inquiring about his new approach.

Where do Manufacturers Stand?

While customers doing business with those dealers seem to really appreciate the experience, not all car manufacturers are ready to embrace online sales.

“Kia Canada is exploring all options to meet the needs of our customers and dealers,” says Frederic Tremblay, public relations and retail marketing manager for Eastern Canada. “We’re happy to see that some of our dealers have found innovative ways to serve their customers.”

Meanwhile at Subaru, anyone can get a quote online for a new Subaru vehicle, after which they are redirected to a dealer that will contact them via FaceTime, Zoom or some other app. Applying for a car loan virtually is also possible.

“Everything that involves pricing and financing can be done without the customer stepping foot at the dealership,” specifies Sebastien Lajoie, media relations specialist at Subaru Canada.

Potential Legal Obstacles

While buying a car online is becoming more and more accessible, there are still some legal obstacles to clear. In Quebec, for instance, the Consumer Protection Act requires the purchase or long-term lease of a road vehicle—either new or used—to be completed at a dealership.

Given the current situation, the initiatives detailed above are being “tolerated” in order to allow businesses to stay afloat.

Charles Tanguay, head of media relations and strategic partnerships at the Office de la protection du consommateur, explains that “customers who feel aggrieved following a transaction that was not completed at a dealership could use that as an argument in a civil lawsuit.”  

So, if car dealers want to continue with online sales, it appears they will have to press the government to amend the law. Whatever happens, we should applaud these shrewd entrepreneurs who’ve decided to innovate and refused to fall victim to the pandemic.