Are you prepared for digital disruption?

Digital disruption is accelerating in auto retail whether dealers are ready for it or not...

I am confident that the number one problem with acquiring more used vehicles is not what you may think it is. It is not the value of the appraisals. It is actually the way, the speed, and the accuracy in which you communicate those appraisal values with consumers. This is a huge driver of why only 43% of new vehicle transactions have a trade-in attached to a new vehicle transaction. The better question is, "where are all these potential trade-ins going?"

The industry has come a long way, but still has a long way to go with driveway / virtual / blind / remote / sight-unseen appraisals. I remember back in the early 2000's when automotive eCommerce was in its infancy. It was initially a struggle to provide listing prices online, even though we were comfortable listing those prices in the newspaper liner ads. The next challenge was getting past providing standardized photos, instead of just having the lot porter take a few photos with very questionable image quality.

The next evolution was to overcome the same challenges with providing new vehicle pricing, and actual new vehicle photos for each unit online. I remember some of my peers just using "call for price" as their new and/or used vehicle online pricing strategy. Although that may have been easier than strategically writing out a process map, or breaking down the ideal client journey, it was not the most effective way to drive top tier results. The interesting thing is that despite the initial pushback, dealers have found a way to be wildly profitable year after year with this increased transparency.

The same principles are able to be applied today with appraising vehicles that are not physically at the dealership. As I travel around the country, I often see the equivalent of "call for price" in many dealers' eCommerce strategy. I also see dealers that are WILDLY successful acquiring vehicles from consumers virtually. Very similar to how some dealers want to physically touch and feel auction units, and how some dealers acquire a significant amount of vehicles virtually & remotely from Simulcast, ACV, OVE, OpenLane, etc. The irony is that many dealers that are comfortable buying auction units online are not comfortable buying more desirable units from potential consumers online, using tools as simple as Accu-Trade for remote, virtual and service drive appraisals.

CarMax recently doubled the amount of used vehicle acquisitions from 707,000+ to 1.4M in 12 months. They credit the rise in those acquisitions to changing their process to acquire vehicles online from consumers, rather than requiring them to physically visit the dealership for a value. They also wholesaled over 950,000+ vehicles to dealers that same year. I'm sure many of them paid more for those vehicles, than they would have paid to acquire them from consumers directly. CarMax also provides a "guaranteed" value, rather than a value "range" online. Does that also have something to do with it?

What do you see as the primary roadblocks preventing dealerships from removing this major friction point in the the majority of transactions? Please add your comments below... ?? ??