The dealership of the future

The Age
15 FEB 2019
How buying a car is about to change
While those ironically bearded inner-city types might well mourn the passing of things like record shops or DVD-rental stores, you can’t help but wonder if anyone – anywhere – will weep if car dealerships go the same way as Blockbuster Video.
Well, obviously the car dealers themselves might be upset, but the buyers almost certainly wouldn’t be.
And this isn’t a hypothetical discussion. Make no mistake; if 2019 isn’t the year that kills the traditional car dealership, future historians will almost certainly track the beginning of the their demise right back to January of this year.
Will there be songs written about apple pies and the year the dealership died? Or, like record shops, will excruciatingly retro-styled versions pop up in our cities’ hipster enclaves, where people might go to get a free cup of terrible coffee and an ear-bashing about a brand’s latest model from someone with teeth so white they’re like smiling sun beds, all for old time’s sake? It’s not likely.
An American study once asked 1000 prospective car buyers what they’d be willing to do to avoid shopping for a new vehicle, for example, and doing their taxes, enduring a month of celibacy, and squeezing into the middle seat in the economy cabin of an aeroplane all got a mention. None of which is ringing endorsements of the existing dealership model.
It’s a feeling echoed by the KPMG Global Automotive Executive Survey, which estimates that 50 per cent of all dealerships would vanish between now and 2025. Those that do survive, it says, will need to “evolve from transaction hubs to experience hubs, (operating) at a very personalised level. Dealers will need to put customer value first, meaning steering services away from the product by creating service across the whole customer lifecycle. These hubs will… reinvent the concept of customer service. Sales support is no longer enough.”
And the car companies, it seems, are listening. Jaguar Land Rover launched a largely car-free retail space in Westfield at Bondi Junction at the end of 2017; a place where, the brand says, all pushy sales staff have been banned. “Our dedicated team is here to organise test drives, answer questions and discuss purchase options, but only if you want to,” it says.
Fellow premium brand Mercedes-Benz has invested heavily in the launch of its ‘Mercedes me’ store in Melbourne’s CBD. The site – part cafe and restaurant, part event space available for public hire, and with just a single car parked within its walls – is designed much more as a community meeting place than anything even vaguely resembling a traditional dealership, with just the one Mercedes product expert on hand to answer any questions that should arise.
Companies like Tesla, Porsche and Subaru have all experimented with retailing their wares in shopping centres, too. But crucially, each also back-up these offerings with traditional dealerships for those who actually want to buy a car. For now, that is.
New premium brand Genesis will launch (well, actually kind of re-launch) in Australia around April, and the brand has boldly declared it will be abandoning the traditional dealership model entirely.
Overview
The luxury Korean brand – which is to Hyundai what Lexus is to Toyota – is about to try something entirely different; launching a brand that will have no dealerships at all, with the aim of “turning the model upside down”.
Instead, Genesis product (beginning with the BMW 3 Series-rivalling G70 sedan and the larger G80) will be sold exclusively from a “brand store” in the Sydney CBD. And in it, you will find no traditional salespeople, no service bays and, mercifully, no bad coffee. There will only be a handful of cars on display, too.
“We will never have dealerships”, says Genesis Australia brand chief, Peter Evans. “There is no dealer involvement. None.”
The brand is using the Sydney market as a test bed for its plan to market its cars through three “channels”, the first being high-end stores staffed by people trained not to act like car dealers but more like helpful Apple Geniuses. Staff will be subjected not just to Genesis product training, but to etiquette and language coaching, too.
The brand’s first site – the former Billabong store in Pitt Street Mall in the Sydney CBD – will span two levels, with staff hoping to coax some of the 46 million people estimated who walk past annually to venture inside; a trick it hopes to pull off by determinedly not looking or acting like a car dealership.
“It will be Sydney to begin with, and Melbourne will follow as soon after that as humanly possible,” says Evans. “And then Brisbane will be the third city. They’ll all be high footfall, low pressure environments.
“Other than the store manager, nobody else has worked in car sales. And that’s a good thing. You can teach people about cars, but you can’t teach people to be good with people. Instead we’ve got managers from five-star hotels, people from events and wedding companies, people who have worked with luxury clothing. But nobody that has automotive experience.
“Customer service will be our point of difference. We’ve got etiquette coaches, we’ve got language coaches, we’ve got corporate apparel experts – we’re trying to benchmark the best, and use the best resources available.”
Genesis’ multi-million dollar investment – the exact number is yet to be revealed, but Pitt Street Mall is among the planet’s most expensive retail space, and the brand has taken a three-year lease and embarked on a mammoth remodelling mission – at a time when the retail industry is itself battling technology for sales might seem odd.
A major international study, for example, which surveyed more than 10,000 potential new-car buyers back in 2015, found almost three-quarters of respondents would have happily completed the entire shopping process online, even back then, without ever setting foot inside a traditional dealership, or even a retail brand store.
It’s a point that hasn’t gone unnoticed by Evans. And so Genesis will also adopt an online channel where you can book and manage your car purchase, and a home channel, which allows you to take a test drive that begins in your own driveway, or to have your car picked up and taken away for maintenance visits by dedicated brand valets.
That means you’d never even need to visit a dealer at service time, because Genesis will have third-party service centres equipped for its models, which will then be returned to owners at their home, office or even a local cafe.
“The whole thing about the idea is choice. It’s a frictionless and painless customers experience; you choose how you engage with the brand. You can search online, you can organise a test drive from your home, cafe or office, and then you might want to come in and finalise that sale. Or any combination of those channels,” Evans says.
“Wherever you want to book the test drive experience, we’ll facilitate it. The people we’e targeting are smart and successful people. They know what represents value, and they know how valuable their time is. We’re trying to make the experience almost overwhelmingly easy. It’s a customer experience like no other.”
Now it must be said, there’s likely a secondary reason for Genesis choosing such a unique launch strategy. Sales of new luxury car brands in Australia being notoriously slow, it’s highly likely no third-party dealers would be rushing to spend-up big on a new dealership that would house, in the beginning at least, just two likely slow-selling models.
Instead, the Sydney brand store and all of its employees will be funded entirely by the Hyundai Motor Company in Australia, which allows Genesis to wait out a slow start without having to listen to howling dealers.
“Our staff are measured and incentivised by customer-satisfaction levels, not by commissions on selling cars,” Evans says.
Another plus is that Genesis’ comparatively minuscule local carpark (the number of its cars currently on Australian roads) allows them to try things that bigger companies simply can’t afford to, like offering free servicing, free parts and even a possible service that repairs minor dents and scratches for free.
“We’re leading on this, which is both interesting and difficult, because it’s nice to be a pioneer, but in many ways we’re paving the way,” he says,
Genesis might be first, sure. But it almost certainly won’t be the last.