Car dealerships were hit hard during the pandemic, when retail stores and non-essential businesses were forced to close as shelter-in-place mandates and shutdowns halted daily life. The Wall-Street Journal reported that even in the second quarter of 2020 (summer) when business was getting back to a slow normal, sales were still down by more than a third.
The wave of coronavirus continues to throttle livelihoods, but dealer incentives might prove to give sales an uptick and motivate weary buyers. Here’s how these dealer incentives will drive demand post-Covid and how virtual reality can keep buyers aware of offers, incentives and promotions.
Low Interest Rates
Everyone has seen the infamous new car ads from dealerships touting 0 percent financing. An interest-free loan, what a steal! While these deals may typically only be offered to prime candidates like those with great credit scores, those who can benefit from them may be pretty thrilled.
US News & World Report notes that numerous manufacturers are rolling out the low interest rates, and this could be a major incentive to buyers. What vehicles offer 0 percent? Volkswagen Atlas, Dodge Durango and the ever-popular Toyota Camry all may qualify for 0 percent financing for six years.
Now how can dealerships offer a 0 percent interest loan? How does this even work? Many buyers may ask this question before plunging into the deal, as it does sound too good to be true. However, 0 percent financing is a pretty common offer/incentive in the automotive world. These loans might not be available to any person coming into the dealership, as Edmunds reports that buyers typically need a fairly high credit score (above 700) to score the amazing rate. If you are lucky enough to have the golden credit that qualifies for the deal, the savings is pretty substantial; Edmunds worked out the numbers…over a five-year loan on a $25,000 car, the buyer would save thousands ($3,300 to be exact).
Edmunds also explains that some dealerships actually take on the interest themselves; that is, they pay the interest of the loan. But the site also notes that this is usually when the buyer can put down a decent down payment, and the buyer’s credit also qualifies them for a low interest rate.
Buyers shouldn’t assume that they are automatically going to qualify for a prime loan offering 0 percent interest. There’s usually fine print in ads that explains that buyers must qualify. However, the 0 percent incentive may be alluring to those buyers who can take advantage of the deal. Even those who don’t have great credit, though, could qualify for a low interest rate.
Deferred Payments
The ever popular: “No payments until….” Deferred payments may prove to be a great incentive for those who need a new car but who might not want to dole out their monthly payments immediately. TrueCar rounded up the deals offered by major manufacturers (back in September), and the list gives an idea about what may be offered in the future. Many of these offers may include stipulations like financing through a specified lender (e.g. Acura Financial Services for Acura). However, those who qualify could defer payments for a specified period, depending on the manufacturer and the offer. Some offers let buyers delay payments for 60 days, others up to 120 days.
Of course, buyers also might need to read the fine print. Again, incentives and offers always differ. Dealerships or manufacturers also may mandate other qualifying factors. And, while delaying payments could save money, inevitably buyers will have to pay. Delaying only delays the inevitable, and buyers also need to understand that the car is depreciating in value during that time. However, these financial incentives could prove to draw in buyers who see the allure of savings.
How to Reach Buyers? The Virtual Experience!
Covid might have flipped the world upside down, but it also helped businesses evolve—whether they wanted to or not. When shutdowns forced businesses to close, many went virtual. Retail sales relied on an online presence, and car dealerships were forced to adapt, too.
In many areas, shopping for nonessential items was limited. Even when businesses reopened, there might have been mandates for masks, social distancing and capacity. In response to all these new rules and guidelines, dealerships went virtual too. Many offered buyers online shopping experiences from their home. Yes, car shopping went online…thanks to virtual reality. After all, how can buyers access incentives if they can’t visit the dealership?
Dealerships began offering virtual showroom experiences to exhibit their inventory. From the safety and comfort of home, buyers could look at new makes and models, from the inside out. Virtual experiences displayed everything; buyers could glimpse into the interior of the car, looking at details as if they were in the dealership.
Augmentative Reality allows potential buyers to view cars from different vantage points. Cars could be rotated to view the vehicle from different angles, paint hues could be switched out, and other details could be changed too. Buyers could create the look they wanted and preview their dream cars.
These virtual spaces made the shopping process a bit less painful for those who needed to buy a new car during the pandemic. But many dealerships also went a step further; buyers could request virtual test drives. Cars were delivered to the home, and buyers could take their prospective car for a drive around town. Other manufacturers offered literal virtual test drives—these experiences were offered via phones like a video game.
Covid is still raging on in the U.S., and manufacturers and dealerships will likely continue to pivot to these virtual offerings. While many dealerships are open for businesses, some buyers—especially those with health concerns—may be hesitant about visiting a busy dealership. Virtual experiences and platforms allow them to shop safely. But these platforms also empower at-home buyers; virtual reality provides a simulated—albeit hyper realistic—experience of reality.
Buyers aren’t making their purchases blind or with limited knowledge. They are simply making their decisions in an augmented or virtual realm. The features are the same, the vehicles are the same, but the experience is within the digital space.
Virtual Reality & Marketing
While the online world kept businesses open, it was also a hub for buyers to find all the incentives and promotions offered by dealerships. Even before Covid, buyers were doing their research thanks to the power of the search engines.
The virtual space, or, rather, the digital space, also gave dealerships a way to draw attention to not just their vehicles but their promotions and incentives, too. Dealer Marketing explains that ‘automation tools’ may be a key point in ensuring that the message of incentives is communicated to the buyer quickly and effectively.
Our future is digital, and even car shopping online may become a new normal. While there may always be a desire for a physical test drive, many buyers may become comfortable shopping for a car online. They may be researching deals and incentives online, visiting virtual showrooms to preview models and may even pursue financing online, too.
Post-Covid dealerships may decide to amp up their online presence—beyond the simple website. We may see interactive videos or explorative features on dealership sites. There could even be financial team members offering videos about the latest promotions. How dealerships adapt to a virtual world will likely depend on the demands of their buyers and the offerings of their competition.
As for dealership incentives, buyers should keep a close eye on models they like and the incentives/promotions offered by each dealership or manufacturer. Shop around, do the research, and, of course, feel free to browse from the comfort of home.