With Q1 coming to an end we wanted to focus on some trends that are affecting the automotive industry currently as well as some trends that will be emerging in the not-so-distant future.
An increase in used-vehicle financing. A stronger focus on F&I and service departments will be the key to profitability. Because of trade tariffs and lower tax returns, those purchasing new vehicles will be inhibited by increased prices and decreased funds. The result? An increase in used vehicle sales. Make sure you have a diverse portfolio of lenders and understand the stipulations of each.
With used cars being a focal point of the industry this year, their reconditioning will require extra focus to achieve what customers are after: used cars that drive and look like new ones. Small, incremental gains in efficiency can lead to pretty dramatic profits. Inspect your processes to see where you can make changes with an eye toward efficiency.
Proactive review management will enable you to get more customers in the door.
What happens when you want some food and are not sure what you want? You probably check locations around you, and then let the reviews make the decision for you. Good reviews get people in the door. Proactively managing your reviews will give you the ability to respond to good and bad reviews, gain new reviews through promotions, and control your brand with what voice you choose to employ across review platforms.
Building content and community that engages your customers will give them a space to consume or add to information. Keeping the customer involved and making them part of your story adds value. Content that engages your audience will keep them coming back for more. A community that is inclusive and informative will keep customers involved. Find different ways to add to content and community online and offline. You are a wealth of knowledge that you can share with customers.
Things to Anticipate
The car of the future will be environmentally friendly, convenient, affordable, and safe. It will be electric, autonomous, shared, updated yearly, and artificially intelligent.
Electric vehicles will increase in popularity. It seems strange to say, but in the near future, the majority of cars sold will be electric. What are you doing to prepare yourself as a dealer to be a leader in the space? With the West Coast Electric Highway that goes from San Diego all the way to Vancouver, it is only a matter of time for other states to provide electrics highways across major portions of their interstate. How will this impact your operations, specifically service?
AI in vehicles. While we are a couple years away from full AI, there are some features that are coming out in higher end cars this year that will soon be standard in the industry. Getting to know them will benefit your dealership in the long run. Familiarizing yourself with the driving features, cloud services, automotive insurance, driver monitoring, and car manufacturing will prepare your dealership with the knowledge necessary to go into 2020 with the knowledge necessary to be successful in the AI vehicle industry. Also, as more and more technology is incorporated in vehicles, you may need to rethink your vehicle delivery process.
With vehicle subscription services being the main alternative to leasing and buying it is important to be familiar with the option. Buyers like this idea because of its flexibility. There is less commitment since it is monthly and there is no negotiating, which is nice for both parties. Speculation is that subscription services won't pan out but do you want to be left behind if they do? Acquainting yourself with subscription based models will allow you to be ready to transition to subscriptions if they do become lucrative and successful.
The increase in environmental regulations will create a cost pressure and make the market more complex. OEMs will have to develop alternative technologies and drivetrains to meet these regulations. This also involves environmental regulations in
the manufacturing process.
Digital retailing will become even more prevalent, and it will permeate the different departments in your dealership. It’s time to look at providing an “omni-experience”, one where a customer can transact with your dealership regardless of where they are or the communication channel they choose to use There is already immense competition the online automotive space. A full-fledged, robust online experience, that is matched by an in-person experience, will allow you outpace other dealers, since most people will still want to test drive a vehicle before they buy it. The majority of buyers already know which model and trim they would like so getting them in the door is often the most difficult part. If your online page is not updated every year you are missing out on providing your customers with a unique experience that they will remember.
Smart cars will become like smart phones. At first overpriced, having people think they don’t need them in their lives. Eventually, they will be the norm. That may take a decade or two but be prepared, the shift is coming. With all of the features in the new premium vehicles it is only a matter of time before they become standard in mid-range and entry level vehicles.
The future is here and if you choose not to embrace it you will eventually fall by the wayside. Becoming familiar with these trends will give you the advantage to strike while the iron is hot.
Don't miss out on this opportunity to learn and collaborate with other forward-thinking dealers.