As an industry, we’re witnessing the largest shift and money grab in history — from the likes of Carvana, Blinker, and Fair, to the possible entrance of Amazon into car buying.
And now, another huge retail company has decided to jump in… but in a way that dealers may be overlooking.
Walmart recently launched a used-car buying service in partnership with CarSaver, which offers vehicle shoppers a one-price model. Consumers can test drive the vehicle and pick it up at a certified dealership. The test launch was so successful that it is now expanding to 250 stores. On the surface, it sounds rather non-threatening, as dealerships ultimately still retain the sale as a certified dealer.
However, every used car purchased through Walmart/CarSaver comes with a lifetime warranty. Why is this an issue? Because Walmart is not only a huge retailer, but also operates as an independent repair facility.
There’ll probably be some sort of reciprocity between CarSaver and Walmart to encourage customers who purchased through this program to utilize Walmart’s service facilities. In addition, any large repairs may also be captured by Walmart. The customer isn’t going to think of the dealer as the business they bought the vehicle from – only as the place where they picked it up. They will view Walmart as the “dealership” – even if only in a digital manner.
Disruption will continue to increase as these retailers identify further revenue opportunities. Ally Financial has also joined forces with the Walmart/CarSaver program incentivizing customers with gift cards to finance through Ally. There goes even more potential revenue for dealers. Add in the flood of off lease vehicles coming into the used vehicle market over the next few years and you have a triple threat: lower used vehicle prices, lost financing, and lost sales.
Every bite and chunk of a consumer’s money taken by a disruptor means less money for your dealership. Deeply discounted vehicles sold through Walmart, potentially serviced through Walmart, with Ally capturing the financing, serves to do only one thing… position the dealership as nothing more than a used car storage facility.
And that’s not something dealerships should embrace.
Don’t lose your lease returns to an independent or some new retail giant. As a franchised dealer you have many advantages; highly trained technicians, factory parts, etc. Make sure your used car department is on top of the “end of lease” process, have your service department flag cars that are good for trade-ins, extend your service hours, add a pick-up and delivery service … there are many things you can do to be more competitive in today’s marketplace. Embrace the competition by upping YOUR game!