Because sellers of pushy cars bite the dust

Last weekend, I went to the mall to buy some lipstick, a pair of black pumps and, while I was there, a new car.

Today, Westfield London, an urban shopping center, is one of the hottest places around those in an automotive mindset. Scattered among shops selling Tag Heuer watches, Tiffany’s jewelry and Apple’s iPhones are outposts of five different car brands including Tesla and Polestar, Volvo’s only electric brand.

The contrast between Genesis ’first UK outlet, Hyundai’s high-end arm in South Korea, and the suburban dealership where I bought my first car couldn’t be tighter. Subsequently, the condescending sellers guarding the acres of vehicles were so high pressure that I ended up ruining my dad for dealing with the sale.

The high-roofed Westfield “studio” featured wooden floors, leather chairs, custom reflectors and just a few shiny cars. The “Genesis personal assistants” in crisp gray clothing were attentive, informative and definitely not pushy as they explained that a car could be brought into my house for a test drive.

Changes in the way cars are bought have been turbocharged this year from the pandemic, chip shortages and the shift to electric vehicles. Future pilots are now beginning their online research. By the time U.S. buyers are looking for a physical car, nearly 60 percent have already settled on a brand, price and even a model, according to a recent Bain survey.

The growing numbers want a transparent price and are willing to buy online. In the UK, buy digital cars increased by 10 times last year and is expected to double again this year. Although most buyers still do a test drive and talk to a seller, many are looking for information on customization rather than looking for regattas on the price of a specific car on the lot.

Yet the growing popularity of electric vehicles has launched a key in the process because buyers know so much less about it. While more than 85 percent of U.S. and German car buyers had preferred brands, the figure has dropped to 40 percent among those looking for electric vehicles, the Bain survey found. “There’s a great opportunity for car manufacturers and dealers to gain a lot of new customers,” says Eric Zayer of Bain.

Lack of chips, manufacturing slowdowns and the time required to increase EV production have also changed the sales process. Tesla has had waiting lists for years; now other producers are using reservation systems to handle the growing post-pandemic demand. U.S. retailers ’inventories have halved for a 23-day supply, the lowest since 1985.

The mall’s businesses deal with many of these problems simultaneously. They increase the visibility of the brand while requiring few vehicles and allow manufacturers to experiment. Polestar and Genesis have eliminated commissions and offer maintenance through valet service rather than operating full UK dealerships.

Caramel producers love the idea of ​​controlling the sales experience and forging a closer relationship with customers. Online bookings have made manufacturing systems leaner and more responsive, and companies like Ford want to keep it that way. General Motors has introduced a unique online platform for all EV customers and non-negotiable prices for their new electric Hummer. “Consumers want a more stress-free experience. The whole industry is moving this way, ”says Rajat Gupta, auto analyst at JPMorgan.

The complete elimination of retailers would further increase the margins by a few percentage points, estimates Dan Levy of Credit Suisse. But a large network of convenient service locations remains a selling point for established producers, and U.S. franchise laws prohibit more direct sales.

Merchant groups risk being squeezed. To sell electric vehicles, they have to invest in recharging and repair equipment but cars need fewer spare parts and less regular service, cutting into a larger source of revenue. Last year, 150 GM dealers have stopped offering Cadillac to avoid having to pay for the upgrade. Those who remain could benefit from consolidation and reduced financing and sales costs if car manufacturers really adopt free commissions and lower inventory models.

The change in car sales is unequivocally positive for luxury malls like Westfield and Minnesota. Mall of America. They operate on restaurants, entertainment and other services to pull customers out of their home and fill the gaps left by failed retailers. “It’s no longer just a shopping center.” It’s a city center in itself, ”says Kate Orwin, UK leasing director for Unibail-Rodamco-Westfield.

If it means I can buy a car and take the kids bowling in the same place without ever talking to a traditional car salesman again, I’m all for it.

Follow Brooke Masters with myFT and also Twitter

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