Uncertainties remain about what life “after” the COVID-19 crisis will bring. Disruptions in the auto industry and wider economy will begin to recede as lockdowns continue to end – but some changes will likely remain.
Simply put, the return to “normalcy” and venturing back out to open businesses will depend on both consumers’ comfort and their financial situations. Dealers need to be proactive in their recovery efforts to maximize their ability to compete in a marketplace that has profoundly changed.
Shifting Your Focus
The fact remains: People still want cars. There’s great opportunity for dealers willing and able to adapt to new realities rather than expend time and resources on forcing a return to the past. Luckily, many of the most effective tools for responding to this changing marketplace already exist – such as data-driven conquesting, personalized marketing and digital retailing solutions all focused on enhanced customer experience.
In many ways, this crisis simply is pushing auto dealers into an already increasingly analytics-driven, customer-centered landscape faster than even the most aggressive pre-pandemic predictions.
Understandably, many dealers currently are focused on their immediate and daily challenges of servicing customers, motivating employees and keeping everyone healthy. But dealerships that are simultaneously proactive in planning will be better equipped not only to survive but also thrive after COVID-19 disruptions and beyond.
The Shift to Virtual Retailing
Now more than ever, consumers have become accustomed to shopping and interacting with brands online. Dealers can expect this trend to continue into shopping for vehicles. Digital retailing has long been considered the future of the industry, with one commonly cited survey finding 86% of consumers would choose a dealership with an online buying capability over one without. Reality check: The future is here.
With this trend comes changing consumer expectations, shaped by increased exposure to personalized customer experiences at every turn, tailored to their buying behavior to maximize engagement and likelihood to buy. These same capabilities are available to dealers right now.
Any dealer without a seamless process to identify prospects in their market through digital prospecting tools, target those prospects with personalized marketing, engage with customers through various channels and online sales processes and complete a sale without the customer entering the dealership is at risk of losing market share. They will lose out on sales to their competitors who do have those capabilities and have integrated them as a core component of their dealership’s customer experience, rather than treating those factors as a curiosity or afterthought.
Future Challenges & Opportunities
The competition for customers, whether online or in person, is heating up as the auto industry turns its focus to “where do we go from here” planning. Along with decreased consumer demand and household financial capacity, other factors will complicate auto dealerships’ plans and require thoughtful preparation to avoid pitfalls and take advantage of opportunities.
For instance, one challenge dealers are facing is the unexpected influx of defleeted cars entering used-vehicle inventories, as OEMs have decreased or ceased production of new vehicles over the past weeks. This is depressing used-vehicle prices across the board as supply expands, which has the secondary effect of influencing new-vehicle lease prices upward through lowered residual values. Lower used-car prices may also make new-car sales slightly more challenging by lowering the value of customers’ trade-ins.
With higher used-car inventories, smaller new-car inventories and skittish consumers prioritizing affordability, dealers have a valuable opportunity, if they have the right tools to seize it. But dealers who can’t effectively prospect, market to and close used-car customers according to their unique wants and needs risk being left behind. Long-term success will require excelling at both, including online-only transactions and in-person sales. This change also may require shifting personnel between new and used sales based on marketplace demand.
Dealers who focus on truly serving their customers by taking a personalized approach to meeting their unique wants and needs ultimately will come out on top.
Andrew Rains (above) is chief commercial officer at automotiveMastermind, where he oversees new business, customer retention, account management and marketing.