E-Commerce is on the rise for about two decades and today its growth is beyond amazing. Where we saw almost every business doing E-Commerce and almost every product being sold digitally, the trend for digital auto sales was not quite similar to other products. But this has changed in the last few years where we have seen many digital showrooms being built and many customers preferring online purchasing than going to a dealership. And now it looks like that the dealerships do not have a bright future mainly because of the cost associated with the switch to electrification.
If it does happen and we have to say goodbye to the dealerships and make every car purchase digitally, it will be a unique and exciting experience. Many experts have predicted a different future of car retailing and some have projected it to be very exciting. But no one can say whether it will be a reality and if it does, to what extent, but it is certain that it will be different and the car dealerships do not seem to have a very bright future.
Volvo is one of the first companies who decided to offer only online purchasing by 2030. The firm said the main reason behind going online-only is to offer their customers transparent pricing and offer a simple process for signing up for an electric vehicle. But the company also said that online sales do not mean that they will root out the physical showrooms. This is what Tesla has said over and over again as well. The firm accepts that without growing the number of showrooms where customers can view the car, see its exterior and interior, and talk to a salesperson, they cannot grow their sales.
So it means, there will be dealerships and they are not going anywhere anytime soon, but what’s also clear is that they will be in reduced numbers and their behavior or the customer experience would be different too.
Volvo’s decision to opt for only online sales means that the burden of selling would be on them instead of the dealer. This will enable the manufacturer to set the car prices, taking this prerogative from the dealers.
The Managing Director of Automotive retail analysis firm ICDP said that it is very necessary to change this system. He also said that our industry is the only one where a dealer begins the conversation with a lie. So it’s a good decision for the company to change this system and other companies must follow this as well.