A mechanic works at the Audi Durham car dealership in Whitby, Ont., on May 28, 2020.Christopher Katsarov/The Globe and Mail
Over the past three months, COVID-19 has forced Canadian automotive dealerships to change the way they do business, and they won’t be going back.
“We’ve moved more just in the last 10 weeks than we have in the last 10 years toward a future that we were certain was coming but was moving along very slowly,” says Mike Stollery, chairman of the Canadian Automobile Dealers Association.
“My kids, they buy everything online, and they always said to me that [if they ran a dealership] they’d not be doing it this old-fashioned way where you go in and you duke it out with a salesperson. These changes were coming, but COVID fast-tracked it.”
Stollery is also president of the AutoIQ network of 17 automotive dealerships, located mostly in Southwestern Ontario. He says that remote communication using the web-based video-conferencing tool Zoom has transformed his company, both for internal meetings and training, and for external sales.
“I could take my phone right now, hook you into your laptop on Zoom, and sell you a car,” he says. “I could take you through all your numbers, show you your options, how much a lease would be compared to a finance contract or cash, and then I could say, ‘Okay, I’m just going to walk out now and show you my BMW M850.’ I could do a complete walkaround of that vehicle, showing you all the product benefits and attributes, and it’s pretty solid.
“We’ve found that customers are at home, they’re relaxed, they’re not in that little combat-zone mentality. Some people can get stressed walking into a dealership because of past experiences. So we’re really pushing forward what we thought was the future of retailing that we knew was coming anyway.”
In recent months, all direct contact with the public has been minimized to limit potential exposure to the COVID-19 virus, but looking ahead, it could also be minimized for customer convenience.
“The consumer can go through the entire purchase journey online,” says Bill Harbottle, president of the Jim Pattison Auto Group in Vancouver. To make it possible, however, he says dealerships will need to be more transparent on their websites. They’ll need to include details of the financial services they offer that aren’t generally disclosed until the customer is sold on the product, and especially not for used vehicles.
“If you want to have a life-insured loan or disability insurance tied to your payment, or if you want an extended service contract, you can’t get all of that [online], and we need to have that,” he says. “We need more transparency, and I think we’re going to see that.”
A service adviser wearing PPE works behind a screen inside a reopened Renault car dealership southwest of London on June 1, 2020.ADRIAN DENNIS/AFP/Getty Images
Not everything can be effectively handled online, however. If a customer wants to trade in a vehicle, it should be physically assessed and valued at the dealership. And no matter how good the new vehicle might look on a digital screen, it should still be taken for a test drive before committing to a purchase.
Even so, this redirection suggests that dealerships may become physically smaller, with fewer vehicles parked on the display lot and more held in less costly storage outside town. It may also mean fewer staff. Harbottle says his group’s 26 dealerships laid off more than half its 1,200 employees this spring, and will probably recall only 80 to 90 per cent of its former staff within a couple of years.
“The roles will change,” he says. “For example, you’re going to have more specialists; some people will just be handling deliveries. As people complete purchases online, you’re going to have a person who will only go through the delivery and familiarize the buyer with the features on the car and how it operates.”
On the other side of the country, Halifax-based O’Regan’s Automotive Group also laid off about half its employees in March. President Patrick O’Regan is optimistic that all employees will be recalled, but only if sales of new and used vehicles return to pre-COVID-19 levels. Total sales this year are forecast to be about 30-per-cent lower than last year, he says, and “we don’t need the same number of people to sell 30-per-cent fewer cars.”
O’Regan’s has also increased its use of Zoom to hold meetings for its 17 dealerships, but O’Regan says there’s still a benefit to physical proximity. “Communication is only 25-per-cent verbal, and you can make a connection in person that is difficult to deliver on a video-enabled platform.”
In such a competitive industry, why has it taken until now for these changes to happen?
“It’s interesting what absolute necessity will do for change,” O’Regan says. “Perhaps we’re a bunch of old dogs that need to be shown something to really believe it’s true.
“Seemingly, every 10 years or so we have some kind of an adjustment. This one is absolutely distinct and unique, but the automotive dealers in Canada are resilient business people, and I can’t help but think that some positives have to come out of this.”
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