Lorraine Explains: COVID-19 complications from the car-seller's side

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COVID-19 and the associated lockdowns may have created changes for insurance companies as well as challenges in mechanical maintenance for car owners.

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But what about for people buying cars, and those who sell them?

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Lorraine Explains: COVID-19 complications from the car-seller's side Back to video

OMVIC, Ontario’s vehicle sales regulator, teamed up with the Automobile Protection Association (APA) to do a study on how dealerships are responding to the new world order, and how consumers are reacting to that response. 

While most dealerships were totally shut down for about a month, as openings began it was evident almost everything had changed. Like most sectors, the auto industry took a profound hit as sales (and parts availability) plunged. In spite of this, sellers scrambled to adapt, and sales are recovering at an encouraging pace. Covering the period March 18 to August 30 of this year, the survey is a three-pronged approach to directly address all the main players: buyers , salespeople , and dealers.

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Dealerships have stepped up to meet protocols surrounding health and safety, following guidelines that OMVIC has set forth based on both provincial and federal government recommendations. Sanitizing high-touch surfaces, adding plexiglass inserts where necessary, social distancing and masks have all led to 80 per cent of buyers surveyed saying they felt comfortable in their buying experience.

“ It’s an impressive result when you stop to consider the complexity of an auto sale or lease transaction, and the need to adapt to highly varied shopper behavior ranging from consumers who conducted the whole transaction remotely (8 per cent) to those who visited three or more locations (20 per cent),” says APA president George Iny.

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Franchised dealers scored higher than independents, which isn’t surprising when everyone is being tasked to find more resources in challenging times. Some 13 per cent of buyers wanted more buying options, saying they hurried their purchase because of safety concerns. Dealers pivoted quickly, and things like being able to sign a deal online (previously not allowed) were quickly put into play. Scheduled appointments for both car buying and maintenance have become the norm.

One finding was almost inevitable: fewer test drives are taking place. Roughly 46 per cent of new car buyers in this time frame made their purchase without taking a test drive, as did 38 per cent of people purchasing a used vehicle. Only 16 per cent of the latter camp had a salesperson along for the ride — previously almost unheard of. While this number has been declining for years, it’s still rather stunning. Making a purchase this big, that can’t be returned, and not taking it for at least a cursory spin? 

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John Carmichael, CEO of OMVIC, says sometimes people have already driven a friend’s car and are familiar with it. I know people who have had a good experience with a rental, and proceeded from there. These instances aside, both the APA and OMVIC highly recommend at least sitting in the car to ascertain seat comfort, sightlines, and things like trunk capacity and rear seat room. 

“Car buying has become more commoditized over the past decade,” says Carmichael. “Consumers are comfortable with buying things online. Manufacturers are making better product, and for the most part, warranties are really thorough.” The difference between hitting “add to cart” on a new Tucson or Tacoma is that you can’t return it. A test drive is still an important thing.

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Some 13 per cent of buyers say they hurried their purchase because of safety concerns

Overall, the survey also found sour spots. Dealers “are not optimistic about Ontario’s long-term economic outlook: 24 per cent are confident or very confident; 38 per cent are neutral while 36 per cent are not confident.”

Their salespeople were more optimistic, with 39 per cent expressing confidence in a recovery. While a majority of dealers (74 per cent) do not anticipate closing up shop in the next six months, they point to three things they need to ensure the viability of the industry: consumer confidence, low interest rates, and manufacturer incentives. 

About 78 per cent of dealers report they have had trouble accessing new inventory, feeling the impact of production disruptions around the world. That will right itself, but for buyers used to a near-limitless feast, there will be some compromises to be made. On the used-car front, the U.S. has been looting our used-car market, as usual, cherry-picking against our weaker dollar. While this isn’t new, it further drains available stock.

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Carmichael says some changes made to adhere to COVID-19 protocols will no doubt remain in place after it’s passed, due to buyers’ preferences. Handling of documents electronically, more extensive use of phone calls instead of in-person showroom visits, and salespeople trained in online sales will all be here to stay. Dealers will follow consumer demand.

The APA reported some buyer respondents had comments outside of questions posed in the study. “ Consider people’s financial situation during this pandemic and realize that money is tighter than usual and not to force products and services onto them (that they don’t need) so that the dealership can boost sales and bonuses can be given out to sales staff. Show some compassion to your fellow ‘human’ at a time like this,” wrote one. It would be nice to see this spirit even outside of a pandemic. 

While many buyers felt dealerships were doing a commendable job in difficult times, there were outliers all the way from “I would like a fresh pen” to one who didn’t like shopping at “stealerships.”

  COVID-19 or not, some things are still business as usual.

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