Virtual Showrooms Become Reality

Normally Dave is more geared towards dealership news and I’m more focused on posting financial information that affects the auto industry, but this week our Marketing Manager Jamie Rubenovitch shared some very interesting information with me on a new type of dealership that I would like to discuss today. We’re all used to going online to check out a new car we’re interested in buying and then heading into the dealership next to interact with the salespeople and get the lowdown on our potential new car. This may be a thing of the past as Audi came out with their first virtual showroom in 2012.

My first thought was “what is a virtual showroom?” Well it’s apparently a lot like what we see in the movies – floor to ceiling digital and 3D screens showing customizable vehicle exteriors, interiors, engines and colours. Now that Audi is on to their second of a proposed 20 virtual dealerships (first was London and most recently Beijing), other auto brands/manufacturers are trying to keep up.

BMW is working on bringing “geniuses” to the dealership. Similar to how Apple has a genius bar of technologically savvy people who are available to explain features and answer questions, BMW will have auto savvy, iPad wielding staff available to answer any level of question.

But what are the benefits of a virtual dealership? They enable dealers to have a presence in smaller urban spaces they normally couldn’t have fit in before. If they don’t need sprawling room for 5-15 cars, they can set up shop in a popular mall and reach more people.

Consumers also benefit from being able to see the ins and out of a vehicle without having to drive to the suburbs and climb underneath the hood. On the flip side, could you buy a car without ever actually driving it? I guess that’s what the regular dealerships are for, and they’re not going away anytime soon.

So far virtual dealerships don’t exist in North America, but it will be interesting so see the degree of consumer acceptance. Dealers have significant investments in their buildings and showrooms. Cars still need to be serviced, so that part of the business likely won’t change, however, what happens to the showroom? I believe consumers still want to “kick the tires” and experience first hand the automobile they may purchase. No matter how sophisticated the graphics and websites are, there will be initial reluctance to buy sight unseen. Automobile purchases represent significant investments to most consumers; it’s definitely not like purchasing a cell phone or small electronic equipment. People want to drive the car and see first hand what it has to offer.

So “hats off” to Audi and BMW for their respective efforts to stay competitive and ahead of the curve. However, this accountant feels that we are still years away from automobile dealers shutting down their showrooms and displaying their cars only on digital screens. Mind you, if consumers are offered virtual rides in the future that realistically represent rider experience, who knows what may happen. 

- Jeff

Service department let down!

I am going to talk about poor service I have both witnessed personally and heard about from family and friends to make recommendations that can help dealers be more competitive and successful. Many dealerships offer excellent service, so the recommendations below will not apply to everyone.

I have been a car owner for over 33 years and I have had a lot of experience dealing with auto dealership service departments. Years ago there were lots of options for car repairs, but the small auto repair shops located at local gas stations have been disappearing for the past decade and now dealerships are the most common choice for repair work. This is a fortunate circumstance for dealerships because the service department usually provides significant margins, but given the level of service I’ve seen lately, I wonder if some dealers aren’t taking this shift for granted.

Over the past 15 years or so I have switched from purchasing cars to leasing them, and consequently I moved my repairs from a local garage to the automobile dealership. I’m not your average Joe at a dealership waiting for repairs. I’ve been working with dealers for many years and I know what drives their bottom line, and I can tell you that service departments deserve more attention at some dealerships.

Recommendation 1 – Get customers in and out as efficiently as possible.

Service is a volume business meaning that a dealership needs to service a lot of customers to see good returns. Dealerships need to be prepared for high volume, and usually they are. I never just show up at a dealership for repair work. I call the day before, secure a time that works and make sure that I am not late for the appointment. And still, sometimes I have to wait a long time before anyone greets me and starts the service appointment. In a volume business, every customer counts. And, in the auto service business, which is a necessary evil to most people, making a customer wait is painful. They don’t want to be there and even though there is coffee and newspapers, they generally have something better to do. Your service department will take care of servicing cars, but you also need to make sure someone is servicing the customer. If your customer is going to wait for their car to be serviced, be sure to keep them informed if your promised delivery time changes. Have a dedicated employee greet and acknowledge incoming customers. Take their keys and let them go as soon as possible.

Recommendation 2 – Don’t make promises you can’t keep.

On countless occasions I have been promised that my car would be ready in an hour only to be let down when it wasn’t ready for 90 minutes. I understand that things can get hectic in the service bays, and there are unexpected situations and a million reasons for a service delay, but your customer doesn’t care. So, in all circumstances, recommend that they take advantage of your shuttle service or take a loaner and leave their car with you. It will take some stress off the service department because they will have more time with the car and it will avoid a situation where you are likely to upset the customer.

Recommendation 3 – Go the extra mile.

I can’t tell you how many times I have heard of people having to wait for their car because they were out of bounds for the service shuttle. This isn’t a pizza delivery service – these customers are paying you hundreds of dollars for a painful, mandatory service that offers them little personal value. Go the extra mile, literally, and do your customers a favour. They’re paying you for it and they’ll continue to pay you for it in loyalty and recommendations to their friends and family.

Recommendation 4 – Hire the right people and train and reward them.

Service staff can have attitude because they are rude or overworked and dealing with the customer takes them away from the long line of cars demanding their attention. You certainly don’t receive this type of service when you enter the sales area of the auto dealership. I know that the service department is a key profit center for the auto dealership, so why is there such disparity in the service provided in the service department? Your service department needs to service the customer as well as the car. Attention to customer service should be considered during the hiring process; is this person technically proficient and well-mannered? Would I want to introduce this person to my most valued customers? Once you’ve hired the right people, have you told them what you expect and trained them on how to deal with a long line? A frustrated customer? Have you rewarded them when you witnessed good behavior? You need to tell your employees what you want and reinforce it with monitoring and rewards.

Recommendation 5 – Walk the floor.

I believe the problem with service really rests at the top. Auto dealer owners are not spending enough time training, educating, rewarding and monitoring their service employees. When is the last time you walked the floor? Did you notice the bored customers flipping through the newspaper in the service department? Did you ask them about their experience? Did you watch your service department interact with your customers? Your attention to service will communicate volumes to your staff.

So, while dealerships are in the glory days of service with less competition from mom and pop shops, don’t be lulled into complacency. Chains of aftermarket service shops offer “Warranty Approved” services that threaten the dealership’s hold over the leased car maintenance market. In addition to threats from aftermarket shops, you can lose customers to the next dealership over when they start to shuttle to and from your area, promptly greet customers as they walk in and generally make service as painless as possible. The profits your dealership gains from service are far too precious to take a back seat.

-- Jeff Carbell