By Ray Birch
BURNABY, British Columbia—Consumers and auto dealers are not just getting accustomed to the new socially distanced buying methods now being employed across the nation, those processes are likely to stick even after the pandemic is over, according to one expert.
There will be a lot learned when looking back on the pandemic, says Vladimir Kovacevic, co-founder and managing partner of Inovatec, which offers online lending solutions. Just like credit unions, auto dealers have had to move quickly change tactics, and dealerships have shifted to online sales, phone consultations and personally bringing cars to prospective buyers’ homes.
“I think to some extent it depends on what happens over the next few months,” said Kovacevic. “There is so much talk about a second wave of the coronavirus and also the flu season. How those things unfold, and how long people have to address social distancing, will impact their long-term behaviors when it comes to car buying. The longer someone has to do something new, the more permanent the new process can become.”
The length of time those new processes are in place— such as online digital signing of both loan and car purchase agreements—will make clear the changes worth keeping for consumers, lenders and auto dealers, emphasized Kovacevic.
“While there are things I might be doing now to buy a car that I did not do in the past, such as looking at the cars more online before I buy, there are likely to be some things that are actually better,” he told CUToday.info. “Maybe a better process that will become permanent. There's definitely going to be some stickiness to the new process, but the question is will that stickiness come from 10% of consumers, 30%, or more? That will depend, again, on how long they have to take these new steps.”
The Lasting Changes
What does Kovacevic expect to be the permanent changes that emerge from the new car-buying/car selling approaches put in place during the pandemic?
From what he has personally seen, including in the data, and based on what dealers and lenders are saying, Kovacevic believes e-signature for loans and auto contracts as the big winner from the pandemic.
“I know a lot of lenders and dealerships were talking about electronic signatures well before the pandemic, but there was always some hesitancy for e-sig to be embraced fully by both sides of this business,” he said. “There were compliance concerns and just questions about going all out with e-signing from many. However, when the health crisis hit, those questions went away quickly. Everyone figured out how to do this immediately. We would have eventually gone more to e-signature regardless of pandemic, but the pandemic really moved things along. Now, virtually everyone has e-signing capability.”
New Efficiencies
Vladimir Kovacevic
Kovacevic also noted that many dealerships are citing improvements in efficiency with the remote shopping and buying process, and with more staff working from home.
“I can see many dealerships staying with a percentage of their staff working from home after all this is over,” he said.
Kovacevic, like many other auto industry experts have told CUToday.info, expects new car sales to be down in 2020. But Kovacevic does not believe a second wave of the coronavirus will have the kind of devastating impact on car sales as experienced in mid-March and April.
“People have become more accustomed to the pandemic,” noted Kovacevic. “Much more so than when it first arrived in the U.S. People, I believe, did not think then it would last as long as it has and how long it looks like the virus will be around.”
Additional Predictions
Knowing they are in the crisis for the long haul and that transportation is a critical need, Kovacevic contends consumers will be buying cars no matter how long the health crisis persists.
“The automobile industry has proven itself to be pretty resilient in the face of economic crises,” said Kovacevic. “People still need cars to get to work, so they are necessities.”
Kovacevic also believes a lot of people who have relied on mass transit and ride sharing will be in the market for cars soon.
Another prediction: there will be a much greater shift to used car purchases, due in part to the limited number of new cars being built this year as the result of manufacturing plants that were idled as a result of the pandemic as well as the effects on consumers’ wallets.
“Used car purchases will pick up and make up for some of the downturn we will see in the new market,” he said.