With the end of the year rapidly approaching, car dealerships are entering an exciting sales period. Next year’s models will begin to hit lots, giving dealers the chance to appeal to early adopters and offer bargain-hunters great deals on this year’s inventory.
Auto dealerships are also facing significant challenges in an evolving online, social, and modern economy. They’re left to find new and ever more creative ways to bring people into the showroom and keep them there long enough to make a sale.
Challenges facing the auto industry
The first half of 2019 saw new car sales dip by 2 percent. On the heels of that news, in June 2019, Edmunds issued a forecast estimating that sales would drop from 17.3 million units in 2018 to 16.9 million in 2019.¹ Other analysts believe that by 2021, new car sales will lag even further behind.
Other factors are impacting the overall profit that dealerships have typically been able to bring in from car purchases. The combined dip and slimming profit margins mean that dealerships are having to work harder than ever for a smaller and smaller piece of the pie.
What’s creating this challenging environment? A combination of elements, according to experts.
- Younger generations have put off buying cars due to tighter budgets, a holdover from the 2008 financial crisis, some believe.²
- Online car buying has leveled the playing field, decreasing profit margins for dealers who now must compete not only with other dealers in their area, but dealers from around the country. Still other new concepts, such as Carvana, offer online experiences that appeal to convenience-minded buyers looking to avoid a traditional in-dealership experience. In 2018, online vehicle sales topped 600,000 units.³
- The industry is in transition, as electric and self-driving cars continue to evolve and appeal to buyers.
- Dealership web sales departments and internet-based vehicle sales services, such as TrueCar and Autotrader, typically offer a lower cost initial offer, saving car buyers time in the dealership. This is often due to different incentives for online salespeople versus showroom salespeople.⁴
- The current U.S. government administration’s shifting approach to tariffs leaves many buyers unsure of whether or not to “buy now” or wait until later, wanting to get the best value for their dollar.
The importance of the dealership experience
However, despite all of these factors that seem to be working against car dealerships, there is some good news. A recent survey conducted by Urban Science found that 80 percent of new car shoppers would not purchase a new car before interacting with it.⁵ The dealership experience remains a critical part of the new car-buying process for many. And that means that there is a significant opportunity to create a link between the dealership experience and the brand.
But don’t be fooled: in a 2018 study by Deloitte, the time spent in the dealership when buying a car is a specific pain point for consumers: 8% of people reported it as their top pain point, and 30% ranked it in their top 3. In the same study, 9% of buyers ranked the dealership/showroom overall condition as one of their top three pain points.⁶
Today’s younger buyers also differ from previous generations in that they are visiting more dealerships before making their decision to buy – 4 visits for millennials versus 2 for baby boomers. That’s why it becomes critical for dealerships to make a good first impression and have an overall positive experience, preventing buyers from moving on to a competitor to make their purchase.
So just how does an auto dealership elevate its experience to stand out from the competition? The answer may lie in something that we often associate with new cars: scent.
How ambient scenting can influence the car-buying experience
Ambient scenting, sometimes called scent marketing, is the process of using specific scents to help a business create a sensory experience. For dealerships, this sensory experience can increase dwell time. It may also expand emotional involvement with the brand and even put anxious car buyers at ease.
Studies have shown that our olfactory senses are powerfully linked to our overall experience. In new research from Premium Scenting and Walnut Unlimited, documented in the white paper the Ultimate Car Showroom Report, experiments showed that scent has an initial impact on our experience within 5 seconds. That eclipses the visual role in experience, which takes seconds longer to establish.
When the olfactory sense is engaged in combination with others, it has an extremely powerful effect on brand impression. Premium Scenting’s research indicates that if two senses are triggered, brand impact on the consumer increases by 30%. If three senses are triggered, that more than doubles to an incredible 70%.
That same research shows that nearly half of consumers – 48% – say that a pleasant smell would encourage them to stay longer in a space. This indicates that a scented dealership experience could help counteract consumers’ pain point of time spent at the dealership.
Additionally, 69% of consumers in the same study said that a pleasant smell would positively increase their perception of the brand. In other words, leveraging scenting can help increase specific emotional connections with a brand, such as luxury or adventure.
Nearly a third of the same respondents said that a pleasant smell would make them more likely to return to a specific showroom. Knowing that younger, car-buying consumers are shopping around at dealerships, using scent to distinguish your brand from others and to increase the likelihood to return could be a very valuable tool.
How to get that new car (dealership) smell
Scent marketing is a science, and establishing the best scent for your brand requires a scent expert. Identifying scents that are incongruous with your overall brand persona or products is as important as identifying the right scent. It is a strategic marketing tactic that must be leveraged properly in order to be effective.
The range of scents that can be used is almost endless. Many consumer-facing retailers use customized scents that speak to their specific brands. Ambius consultants can help you choose the best scent for your dealership or showroom, based on your brand’s overall persona and your specific goals.
Ready to learn more about how scenting can impact your dealership? Download our Ultimate Car Showroom Report. In the report you’ll discover how harnessing the power of scent can:
- Build brand loyalty
- Create a consistent brand experience
- Maximize time spent by consumers in the showroom
- Positively influence consumer behaviors
- Increase customer intent to purchase
¹CNBC, “Edmunds warns of a tough 2019 for US auto industry as sales slide for second time since Great Recession and profits shrink,” June 26, 2019.
²Bloomberg, Don’t Expect Car Ownership to Become Obsolete, March 27, 2019.
³Cision / PR Newswire, “Online Retail to Become the Preferred Form of Vehicle Purchasing Among Private Buyers,” September 5, 2019.
⁴Edmunds, Internet vs. Traditional Car Buying. June 5, 2017.
⁵Clean Technica, “Dealership Experience Still Important To New Car Buyers, Says Urban Science Poll,” August 14, 2019.
⁶Deloitte, 2018 Deloitte Global Automotive Consumer Study Navigating the Customer Journey: Canada, September 2018