Automotive Dealers Must Continue Evolving to Stay Ahead

Once again, auto dealerships need to adjust to fast-changing economic and consumer trends to be successful for the remainder of this year…and beyond.

Strategies that worked during the pandemic and the chip shortage won’t work as well as inventory levels rise, incentive levels creep up and transaction prices fall from their recent lofty heights.

As the unpredictable selling climate fueled by low inventories ends and more customers expect convenience, transparency and personalized experiences, automotive dealerships must adapt to these changing times or risk becoming an afterthought.

Electric Vehicles Turn Automotive Norms on Its Head

 Electric vehicles require new skills and knowledge compared with traditional internal combustion engine (ICE) vehicles, and dealerships must adapt their business models accordingly.

 Sales teams need to know what the EV ownership life cycle looks like to properly educate and guide new customers through the sales process. Training programs for dealership staff should be designed to offer specialized services for electric and autonomous vehicles while staying up to date on the latest developments in the industry.

 Dealers also must understand that brand loyalty could change significantly over the next three to five years as these new products reach the market. Recent data from S&P Global Mobility shows customers who were previously loyal to one brand are essentially starting from scratch as they consider purchasing an EV. Also, consumers are more willing to compare brands they may have overlooked in previous years. This means sales teams must have knowledge about every type of EV in stock so customers ultimately feel comfortable with the vehicle they're purchasing.

Rising Inventories and Changing Consumer Habits

 While still far from pre-COVID levels, data from S&P Global Mobility shows advertised inventory has steadily increased over the past six months, giving customers more autonomy. Mainstream customers now have over 50 percent more inventory to shop from compared with six months ago on average, while luxury customers sit at about 40 percent more.

The narrowing gap between supply and demand means customers will increasingly have an opportunity to be more selective and pickier about the brand and dealership they purchase from – and dealers must be prepared to adapt to this new environment.

Today’s buyers are also more likely to wait for the vehicle they want – taking time to research and compare vehicles online, read reviews from other buyers and even complete the entire purchasing process without stepping foot inside a dealership. To meet the expectations of a growing number of buyers, dealers must allow customers to complete parts of the transaction process online and allow virtual access to the vehicle purchasing process.

This shift in consumer behavior creates new challenges for car dealerships, as they must now compete with online retailers and digital marketplaces. To remain competitive, dealers must embrace new technologies and offer more flexible and innovative services – including online car buying options, virtual test drives and remote car delivery services. An example of this is Mercedes-Benz, which recently opened an upscale boutique retail concept in Atlanta operated by RBM of Alpharetta. This storefront features only two vehicles and is meant to introduce the brand to new shoppers.

Online car buying options allow dealerships to reach a wider audience and attract customers beyond their local area – especially in rural areas and smaller markets. By offering online car buying options, dealers can expand their reach without establishing an additional store. 

Relationships Matter More Than Ever

In addition to embracing the electric future and adjusting to evolving trends, dealers can’t forget about the basics. They must continue to focus on building customer relationships – especially since there is increased demand for personalized experiences and exceptional customer service.

By embracing emerging technologies early, offering innovative services and focusing on customer relationships, dealerships can remain competitive and thrive in a rapidly evolving automotive landscape. The traditional way of selling cars will no longer suffice, and dealerships that evolve will be the ones that succeed in the long term.