Wheels & deals: Inside pandemic car buying [Feature]

With dealerships' doors closed during the pandemic, many consumers have been forced to opt for online shopping and home delivery to complete their orders. But as dealerships opened back up and consumers flocked to showrooms over Memorial Day weekend, one thing was clear: the death of the dealership is all but a myth. Buying and selling a vehicle during a pandemic is no simple task. When Chelsea Kauffman ’s 2012 Ford Fiesta was failing her, she had a choice: ride it out or buy a new, more reliable vehicle. OEMs and their captive counterparts have offered aggressive, low- to zero-interest deals on new vehicles with up to 84-month contracts in an effort to spur vehicle sales, but those promotions are reserved for “qualified borrowers” in the prime and super-prime credit tiers. With a less than stellar credit score, Kauffman had to explore other options. Like many consumers during the pandemic, Kauffman’s car-buying journey began online. “I’d been looking online for several months, trying to narrow down what type of car would fit my needs. I mostly viewed local dealerships’ websites to see the different options available,” she said, noting that she’d spent about 10 hours searching the sites. Kauffman’s search led her to Carvana , the online car retailer and financier that has been bullish on expanding its market share. In fact, last year, Carvana’s origination growth amounted to more than 100% year-over-year increase, and the company ramped up its stand-alone vehicle purchase program to keep up with inventory demands before COVID-19 halted consumer spending. “I almost purchased through [Carvana],” Kauffman said. “However, their financing options were limited and came with very high APRs. The trade-off was that they don’t do a credit check, so it would be a good option for someone who can’t get a loan elsewhere.” Still, the fact that she couldn’t test drive the vehicles, coupled with the 19% annual percentage rate she was offered, prompted Kauffman look elsewhere. After months of deliberation, she eventually decided to visit a Toyota dealership in Marysville, Wash., at the beginning of May. “I was definitely nervous at first,” Kauffman told Auto Finance News . “I wasn’t sure what the procedure was or if dealerships were even doing test drives. I was also worried I may be chastised for looking at new cars during the shutdown, or that I would be rushed through looking at cars so they could get me out of the showroom.” Yet, once she walked into the dealership, Kauffman immediately wished she had visited sooner. “The overall vibe was very relaxed and pleasant. As I walked in, I had to check in with a receptionist — test drives were conducted by appointment only, but they had a free sales representative, so I was able to get in immediately,” she said. All employees wore masks and most wore gloves. Hand sanitizing stations were dotted all around the showroom and desks had clear partitions to separate sales personnel from customers. “The receptionist and sales rep seemed happy to help me and my sales rep was very patient as I looked at cars. While I was there, several couples and a few families cycled through, there was always about three other customers working with sales reps.” The process was very hands-off, Kauffman said. “There was very little pressure and my rep was just happy to answer questions and let me take my time. The only downside I see is for somebody who would prefer to have a hands-on experience. I had to figure out the controls and features of each car on my own while driving, unless I specifically thought to ask beforehand, as the rep would not be in the car with me,” she explained, noting that she didn’t mind this, but stressed that other buyers might feel differently. In the end, Kauffman settled on a new 2020 RAV4 Off Road TRD, which she financed through Wells Fargo Dealer Services at 6.2% APR, and qualified for a $1,000 rebate. She still spent three hours in the F&I office finalizing paperwork — a frequently voiced industry headwind that online retailing seeks to eliminate. “I felt so relieved and excited driving off the lot. The process was not overly stressful and I felt like I was able to find the perfect car for myself. I would actually prefer the process as it is now compared to how I’ve experienced buying a new car in the past,” she said. The other side of the coin Dealerships, too, are trying to find their foothold as stay-at-home orders are lifted and consumers return to showrooms. Further south, the showroom at Los Angeles-based Galpin Motors looks similar to Marysville Toyota . “Safety was our primary concern,” Jeff Skobin , vice president of operations at the dealership told AFN . “Customers saw that from the minute they pulled in. We set up shaded tables in outdoor areas, so that if customers preferred to be outside, they could. Inside, we're blessed because Galpin has large showrooms to begin with, so we took out the extra cars, and we were able to spread out tables throughout the showroom,” he said. “We had acrylic shields on every single table. So anytime a customer was talking with someone other than who they came with, we had protection there. We had sanitizing stations at every entrance and in every office — all employees were wearing masks, and we offered customers [masks] that didn't have them. They were very patient with that because I think people are still learning and they still run out of the house and sometimes forget a mask,” Skobin explained. Customers could test drive vehicles on their own, with a dedicated crew to help sanitize customer touch areas, with an additional crew working overnight. On the showroom floor “there was there was excitement. And I think, frankly, that was largely in part with customers were extremely appreciative about all of the safety steps.” Galpin Motors had been open for roughly two weeks prior to the Memorial Day holiday, one of the largest car-buying events of the year. Ford Motor Co . and its captive Ford Motor Credit extended what is usually a four-day sale to 12 days, for the first time allowing customers to “bring the Memorial Day sale to [their] home,” Skobin said. Although Ford provided no direct reasoning as to why they extended the holiday sale, Skobin speculates that it was to provide customers with peace of mind and allow them to spread out their visits. “To have the ability to, frankly, communicate to a customer that we can spread the sale out and tell them, you don't have to come in this weekend, you can come in throughout the week. Or, we can bring the vehicle to you. There's been a lot of people that have taken advantage of that.” Still, many amenities that Galpin offers its customers, including a full-service restaurant and a Starbucks , remained closed due to COVID-19 directives. But that didn’t deter customers from visiting. “There was a about three weeks where [online purchasing] was the only option. We had customers who wanted a vehicle that bad, so we did our best to make that process is as easy as possible for them to give them the confidence” to complete the purchase, Skobin said, noting that the dealership had already sold hundreds of vehicles online before they were able to open up the showroom. “Once we opened again, people still enjoy coming and seeing the cars and touching the cars and, as long as our process is positive around it, we think that’s still a big part of the business,” Skobin said. Editors Note: This feature first appeared in the June issue of Auto Finance News , available now . Auto Finance Summit, the premier industry event, returns October 20-22, 2020, as a virtual experience. The virtual experience will offer the same quality networking and education as past events, all through an online platform. To learn more about the 2020 event and register, visit www.AutoFinanceSummit.com .

Wheels & deals: Inside pandemic car buying [Feature]

US initial jobless claims worse than forecast at 1.51 million

USAA’s Renee Horne returns to the Auto Finance Summit speaker faculty

Related Posts

Extended terms driving refi applications

Credit access improves as new-car ATP rises 1.2% YoY

Investor tied to troubled bank loans charged with fraud by US

Judge dismisses Tricolor noteholders’ case against JPMorgan, Barclays, Fifth Third

USAA's Renee Horne returns to the Auto Finance Summit speaker faculty

Stay Informed with Our Newsletters

The Roadmap Podcast

SPONSORED

Why credit unions give dealers an edge in today’s auto market

Driving better decision-making across auto finance operations with SAS

Auto finance’s first line of defense: Raising the standard in integrated software partnerships and data strategy

Retrieve your password