Dealer or no dealer: Why auto brands must not chose too soon

Most brands with a brick and mortar retail presence have long since accepted that their business models must change for a digital age. But few have as much relish for that change as auto manufacturers seem to.

Their appetite for change is easily explained: the more of the purchase journey takes place online, the less power resides with potentially troublesome dealer networks. But manufacturers anticipating that they can trim dealer-related costs in the knowledge that consumers will navigate the purchase journey online are jumping the gun.

Whether in developed or rapid growth markets, there is one clear winner when you ask potential auto buyers whom they think is the most reliable guide for their purchase decision. In the US, over a quarter of buyers say that dealers are the most reliable source of information they have; in China it's over a third. Both of these markets feature increasingly tech-savvy consumers who make greater and greater use of digital media in auto research; yet dealers remain almost twice as trusted as these online sources.

It's not just the trust with which dealers are perceived that should give brands pause for thought; it's the way that this influence is wielded throughout the new, digital path to purchase. TNS's studies of the auto purchase journey in both the US and China show buyers visiting dealers at every stage of the process, with visits playing different roles according to how far advanced the purchase cycle is, and dealers at their most influential in the crucial middle stages when consumers are narrowing down their choices.

Where does this tenacious influence come from? In the US, dealers are seen as a more credible alternative to blogs that savvy consumers have identified as being seeded by brands themselves; in China, a human face that can be interrogated is the most credible perceived source of information.

A proper understanding of dealer-consumer relationships is, therefore, vital for auto brands planning to evolve how they do business in the digital age. But it's also crucial for dealers themselves if they are to maintain the influence they currently enjoy.

The author is Andy Turton, global development director, automotive practice, TNS. Re-printed with permission. Link: http://blogs.tnsglobal.com/tns_automotive/