The automotive industry is always changing, with new challenges that automakers and dealerships need to overcome. One of the biggest recent challenges in the industry has been the continual decrease in new car sales year over year. One report found that new vehicle sales within the first five months of 2022 were 4.1% lower than the same period last year. That trend is likely to continue as the automotive industry struggles.
While this and other challenges will make things more difficult for businesses in this industry, some solutions can help you overcome them. Here we'll review a few of the biggest challenges in the industry today and discuss some potential ways to resolve them.
1. New car supply bottlenecks
One major challenge affecting the automotive industry is a new car supply shortage. This is largely due to the lingering effects of the pandemic, as vehicle stock continues to be difficult for dealerships to replenish due to supply chain disruption. A couple of specific reasons for this shortage include the reduction of private sellers and global vehicle production. The limited supply of certain parts, such as vehicle chips, has also contributed to the supply shortage.
If dealerships are having a hard time restoring their new car supply, there are a few workarounds. One way to overcome this challenge is to focus on selling existing vehicles. Investing more in marketing can encourage people to purchase more used vehicles on the lot. You can also market your aftermarket services, which would generate more repeat sales from existing vehicle owners.
2. Increased demand for used cars
People want to save more money and get around the new vehicle shortage by purchasing used vehicles. As the demand for used cars increases, dealerships may struggle to maintain their inventory. While the prices of used cars have increased dramatically in recent years, dealerships still have to deal with growing demand.
To adapt to this change, dealerships can take a few key steps. One way is to promote trade-ins. Offering good incentives for people to sell their vehicles to the dealership can help restock used vehicle inventory. At the same time, dealerships can search for older vehicle models to buy.
Another means of meeting this demand is to optimise the online car buying experience. As a growing number of potential customers turn to you for used vehicles, you need to stand out from competitors with a great platform. People should be able to conveniently find the vehicles and features they want through your store. You can give these shoppers the ideal experience by using rich data and keeping the online shopping process consistently smooth.
Dealers with inventory shortages are also taking a personal shopper approach to selling vehicles. This further allows for a more personalised shopping experience that can supplement online ordering. This entails assigning personal shoppers to prospective customers. These shoppers then work to understand the customer's unique wants and needs to match them with the right vehicle and features.
Taking each of these steps can help dealerships work with a limited inventory while differentiating themselves from the competition.
3. Changing customer behaviour
In addition to supply and inventory shortages, dealerships have to adapt to changing customer behaviour. Because of the other challenges in the automotive industry and the increased reliance on online shopping, customers are engaging with dealerships in different ways.
Some of the notable behavioural changes among consumers include:
Customers generally don't spend as much time as they used to when making a buying decision. As a result, they often figure out what they want and seek it faster, which also applies to vehicles. Because of this, dealerships need to be able to accommodate fast-acting customers with an efficient shopping experience. This includes optimal convenience both online and on the lot.
Buying more vehicles online
As mentioned, online vehicle shopping is becoming increasingly popular among buyers. This is why you need to offer customers a superior online shopping platform. People should be able to efficiently browse your inventory with a virtual showroom. You should also make it easy for online customers to select various features and complete their purchases, eliminating the need for them to set foot in your dealership.
Also, consider the fact that car buyers spend 59% of their time conducting online research. If people can find you during this research phase to learn more about the right vehicle for them, you'll likely be the first dealership they turn to when it's time to make a purchase.
Increased mobile use
In addition to shopping online for vehicles, more customers are using their mobile devices to conduct research and make purchases. To accommodate these mobile users, your website and overall online shopping experience should be mobile-responsive. People should be able to easily browse your site and enjoy a streamlined buying process, regardless of screen size.
Use the right strategies to stay ahead of competitors in the automotive industry
With the help of the right solutions to these and other challenges, your dealership will be able to get through the rough patches and continue to succeed. Implementing the right software is one of the best ways to keep your dealership on top.
Specifically, reliable business intelligence software can give you what you need to optimise your marketing campaigns, sales efforts, and other aspects of your dealership. Find out more about the benefits of business intelligence software for dealerships to learn what this particular solution can do for you.