That said, do companies already doing online sales, such as Carvana, have an edge in the new generation of car buying?
Yes and no.
When it debuted in 2013, Carvana leapfrogged the franchised dealer by allowing consumers to buy cars online, which forced franchised dealers to elevate service and allow customers to complete transactions in any number of ways. In 2018 Carvana sold 100,000 cars; last year it sold 177,549. (Revenue in 2019 reached $3.94 billion, an increase of 101%, year-over-year.) Company chief Ernie Garcia has said he thinks annual sales can reach 2 million vehicles.
The company’s current and best advantage is its centralized inventory and its relatively easy seven-day-return policy. Most local car dealerships can’t compete with that from a logistical point alone. But Carvana’s business model is difficult to scale to a truly national scale, and this will keep it from totally replacing traditional dealers, which are too locally focused to sell online across a national platform.
“It’s a niche thing,” Tynan says.
If you do decide buy a car online, the most essential thing you must do is fully understand the return policy.
Will there be a different future for the purchase of a luxury car?
Yes. The new normal for car buying may very well fall along the line between wealthy and average.
“The Carvana-type of online buyer is that kind of person who buys on Amazon. It’s a digital transaction,” says Anspach. The franchise dealer is still the trusted choice of consumers who want an experience for a larger purchase. Such automakers as Lamborghini, Ferrari, Bentley, and Rolls-Royce have long catered to that impulse with exclusive ateliers and customization shops that are separate from dealerships.
“I envision that this type of luxurious, intimate environment could be a good model for the future,” says Glaeser. “For exclusive and high-end cars, it would be a boutique or salon that will handle customization, selection of colors and textiles and leathers, and all of that for the client. It will be very safe, very one-on-one.”
Will consumers stop buying cars as often as they used to?
It’s likely. There may be some permanent tapering, even after the primary concerns of food, shelter, and health—which are foremost in mind during a pandemic—are allayed. The average age of the car on the road today in America is 11 years; expect that number to rise, says Gillis.
“There’s a tremendous lack of demand, not pent-up demand,” he says. “Consumers are thinking: ‘You know, maybe I really don’t need a new car right now. My car is fine, it’s running well. I’m rarely using it. I don’t feel this urgency to go out and buy a new car.’”