Trends That Will Drive Industry in 2016

Dealers need to keep in mind changes affecting automakers, such as safety and fuel-efficiency regulations, because they will have an impact on the retail side.

Vic Lance

February 17, 2016

5 Min Read
Trends That Will Drive Industry in 2016


The automotive industry is one of the most exciting business fields, and 2015 definitely proved to be a successful year for automotive professionals. More than 17 million vehicles were sold in the U.S. alone, which brought sales to the promising stats before the recession.

Betting on investment in the automotive trade seems to be a safe one.

The healthy market definitely is good news for auto dealers, who are a main branch in the selling cycle of the industry. But what else should car salespeople keep in mind in 2016?

Besides growing sales, a number of other factors will influence auto dealerships throughout the new year:

Safety First

One of the biggest trends in the automotive industry is the increased focus on safety features. It is being enforced not only by customer demand, but also by regulatory organizations that govern the auto industry.

Auto producers now have to meet higher standards for ensuring the safety of users, which include rearview cameras as standard. While the new regulations are certainly of benefit to consumers as they guarantee the reliability of their vehicles, safety add-ons certainly are increasing production costs. Automakers are bound to find new ways to balance out the higher costs and assess how these would impact the price for retailers.

For auto dealers selling new vehicles, the profit from servicing and parts often is the main source of revenue rather than actual car sales. With increasing vehicle prices due to the new regulations, it remains to be seen how the profitability of retailers might change. But one thing is sure: An even wider array of servicing will be involved, as new safety features will require regular maintenance.

Fuel Efficiency in Spotlight

As in previous years, regulatory bodies are placing a strong focus on fuel efficiency for new vehicles. The federal government has set specific targets in the CAFE standards. The stated goal is to achieve fuel savings of 1.8 billion gallons (6.8 billion L) of fuel per year.

The fuel-efficiency regulations were tightened in 2009 and have driven changes in the industry since. Similar to safety features, fuel efficiency standards are increasing production costs for automakers and potentially driving vehicle prices higher.

For auto dealers, the trend in 2016 in relation to fuel efficiency will depend largely on how automakers adjust sticker prices in relation to higher production costs. The effect of credit availability on consumer demand, the state of the U.S. economy and even by popular opinion shifts also will shape dealerships’ sales and revenue.

The New Consumer

An important trend for auto sales that has been evolving in recent years is the changing disposition of consumers towards making car-buying decisions. With an abundance of technology and information online, people now are able to learn much more about the specifications of vehicles, as well as about prices and competitive advantages.

In this sense, the role of the car salesman is changing. Back in the day, consumers would learn about car models at the showroom. Today, they often arrive equipped with a thorough competitive overview.

Naturally, this places auto dealers in a different position in the auto sales cycle. They need to be complete experts on the models they are selling to match customer expectations. Besides that, people are interested in having a quicker and more pleasant buying process. Auto dealers thus need to devise new ways to make sales to increasingly tech-savvy and informed consumers.

Expertise, honesty and innovative sales cycles are some of the key methods that would drive successful deals for auto dealers in 2016. Plus, they can adapt to the new ways in which people choose their vehicles by using data-collection systems to analyze consumer behavior online and match it with the best sales approach.

A More Competitive Market

The way people buy cars is changing, and so are their expectations toward the standard specifications of vehicles. With sharp product differentiation withering away, consumers are not as focused on staying loyal to a brand if another one offers better features.

Thus, auto dealers have another trend to adapt to during 2016: Besides finding the right way to cater to well-informed buyers, they will have to devise new tactics for keeping their customer base. With more people experimenting with new brands, car salesmen might also have to add those to their showrooms.

Considering the abundance of buying options out there, auto dealerships will be subjected to increased competition. As customers arrive more informed, they are much better suited to judging whether a dealership can be trusted.

Naturally, the sales staff needs to be duly licensed and bonded. But dealerships likely will need to step up their game and offer consumers more reasons to choose them for their next vehicle purchase.

Economy and Consumer Factors

The future seems promising for the automotive industry, judging by the increasing sales and revenue in the past few years. The forecasts for the overall economy, and specifically for consumer behavior, support the generally positive prospects for the trade.

Some uncontrollable factors, however, likely will influence the automotive industry as before. Unpredictable oil prices often affect how buyers choose vehicles and decide when to buy.

With low oil prices and abundant options for financing, the current trend shows a higher demand for expensive and large pickups and SUVs. However, this consumer preference easily can change if there is an oil price increase or limited crediting possibilities.

New government regulations and tighter requirements also can impact the automotive industry, as the current trend toward more safety features and better fuel-efficiency standards illustrate.

These five current trends are bound to affect how professionals in the automotive industry will thrive in 2016. Stricter requirements, improving economic factors and an ever-more knowledgeable consumer will be shaping the face of the trade this year.

What are the top trends for the industry that you foresee for 2016? We’d love to hear your thoughts in the comments below!

Vic Lance is the founder and president of Lance Surety Bond Associates.

Subscribe to a WardsAuto newsletter today!
Get the latest automotive news delivered daily or weekly. With 5 newsletters to choose from, each curated by our Editors, you can decide what matters to you most.

You May Also Like