Will Technology Replace Humans in the Car Industry?

By Bobby Doaei, Award Winning Luxury Car Salesman

The automotive industry is changing rapidly, and as a result, automotive retail sales are changing with it. In major urban settings have you noticed something? Where are all the professionally trained salespeople who will meet and take clients from the beginning to the end of the deal all by themselves? A rarity now and soon to be forgotten. Is this progress? Debatable, I think, having watched this industry up close and personal for many years. Who will win in this new era? Certainly not the client, in my view.

The car sales industry is not for the lighthearted. It’s a tough industry where reputations and integrity mean a lot if you want to maintain client relationships. Most new car salespeople don’t make it in this industry. Being on 100% commission is tough in any industry but especially in car sales. Billionaire Jim Pattison who started out owning car dealerships, kept his sales teams ‘motivated’ by firing the lowest performing salesperson every month. This is a make it or break it industry.

After being a very successful car salesman in the luxury vehicle segment for over twenty years with 300+ clients, I believe that retail car sales are changing dramatically and not for the better, and certainly not to the advantage of clients. Now, it’s all about corporations making more money and paying less to front line employees and salespeople. That’s why I recently made the decision to leave the industry, but I still maintain a strong relationship with my clients.

That is why the majority of these corporations have grown from owning just a single dealership to increasing their exposure and acquiring as many dealerships as possible.

Just like any business, corporations focus on reducing operating costs to improve the bottom line. This includes paying less commission because commissioned salespeople make up one of the largest segments of employee costs at dealerships.

Over the past few years, I have witnessed the reduction of vehicle commissions. Corporations are finding ways to cover their expenses and keep more profit by paying less commission to salespeople. In some cases where the gross profits are large, dealers are removing most of the gross profits from these cars to improve their profits and avoid having to pay large commissions.

Having successful commissioned salespeople, especially those with a large client base acquired over many years, is perceived as a threat to dealership owners, as they become more irreplaceable the more successful they become.

This is something dealer owners dread not only from a profit perspective but also, from the salesperson maintaining control over the client relationship. In short, if the salesperson leaves for greener pastures, so do their clients. It leaves dealer owners to start all over again with a new top performing ‘irreplaceable’ car salesperson.

In response to higher costs draining their profits, dealer owners and corporations are clearly moving to operate car dealerships like a factory line, something you commonly see in an Apple store. The idea is that you will not have one individual helping you (a salesperson) throughout the whole process of buying a car, but many.

In such a factory line model, you will have a greeter who will triage and qualify people walking in, taking a call, or answering an email. Then you will get introduced to a product knowledgeable person who explains the features of your desired car and help you test drive it.

Lastly, you will get handed off to the closer / finance person who will run the numbers and make the deal. This sounds like a prelude to AI handling the client journey completely in the future, doesn’t it? In my view, car sales will move more and more from brick-and-mortar locations to online sales. It’s already begun with clients choosing options online even before the car is built. Technology and online buying are no doubt the future of car sales.

By having multiple individuals involved in each transaction and cutting out the commissioned salesperson, dealer owners can pay just above minimum wage, and replace these employees very easily with little or no impact to their profitability. As you can also imagine, this will change the relationship between the client and dealership significantly by providing more control to dealer owners.

Lower costs yes, but also the clients cannot be maintained by one ‘irreplaceable’ person that can hold the dealer owner hostage. This is a big win for dealer owners.

Even though almost all traditional car salespeople are on 100% commission and are promised to get a certain percentage of the profit on each vehicle transaction, it is the corporation that completely controls how much the salesperson will make and when they get their money. This can often be a moving target depending on how the economy is performing and who is in charge.

Owning a car is becoming a luxury only for those that can afford it. Rideshare services worldwide are growing dramatically as a result. I believe that as life becomes more expensive in the future, owning a car and knowing how to drive will not be for the many, but for the few elite and upper classes of society, just like owning a horse is today.

When you walk into a car dealership and get handed off to multiple people with separate and narrowly defined skillsets, it has been created by design by the dealer owner to make more money. When one of these people says, “I will have to speak to the manager,” you know you are not speaking with the right person. When you buy a car, you are not in an Apple store. You are buying a very expensive item. Buying a car has unfortunately been relegated to buying a Smartphone in these new ‘modern’ dealerships.

Most young people nowadays cannot afford to buy a car due to the economy and many in this generation don’t even have a driver’s license, nor do they want one.

By contrast, when buying a house, experienced and professional realtors still take you through the client journey from the beginning to the end of the transaction and even after. It is an absolute necessity given that it is the largest and most complex purchase in most people’s lives. Realty may be the last advocation for the professional salesperson. As I indicated, watching the way most car dealerships are moving, I left the industry. Yes, you guessed it. I moved to the real estate industry where my skills are still much needed and valued, but more importantly, where I can look after my clients’ best interests properly. Afterall, that has been the secret to my success throughout my career. My bottom line has always been, only when my clients win, I win.

Contact Bobby Doaei
Phone: 647-885-8220
Email: [email protected]