A brief glance back at the auto retail industry from the turn of the millennium would be markedly different than it is today. Cars are exponentially more technologically advanced, and the cliché salesperson has been replaced with product advisors. The number of customers financing rather than paying cash or using their own money source has also grown, and of course, MSRP has climbed by around 60% in the past 20 years.
The next few years will see accelerated industry growth far beyond what previously occurred in two decades. This year alone appears to have potential to be a groundbreaking one. In a news release on Friday, Cars.com mentioned five areas that have growing interest, and they are areas that both consumers and dealers should be paying close attention to.
1. Dealer orders are picking up steam
In the last year, 16% of car shoppers pre-ordered their vehicle and almost all expressed satisfaction with the process’s ease. More than four in ten who recently shopped for a car responded that they “plan to preorder their next vehicle through a local dealer”.
Detroit Bureau Chief at Cars.com, Aaron Brangman, said, “More vehicles are being pre-ordered through dealerships as dealers continue to manage inventory shortages.”
The increasing willingness to order weeks or months ahead to get the vehicle build the customer desires reflects a shift in the industry, partly due to the lack of new cars on dealer lots as well as the desire to pursue their vehicle purchase on the customer’s own terms.
|Related: Is low inventory messing up your dealership’s website experience?|
2. Americans are geared up for electric cars
Confidence is growing in electric vehicles among Americans, especially after EV charging infrastructure investments have been announced by the Biden administration. Sales are still lagging among EVs, although it can easily be inferred that it’s due to few options among carmakers. The number of EVs being released this year is likely to see growth in electrified purchases at a rate the industry hasn’t seen before, and approximately two in three survey respondents indicate that EV incentives and charging investment will make them more likely to buy an EV.
3. New and used car price increases aren’t deterring buyers
For dealers, pricing has become a tertiary consideration in the selling process with inventory challenges still ongoing. Cars.com data shows that “more than 60% of consumers stated the inventory shortage and price increases haven’t changed their purchase timelines”.
The trend toward higher MSRP and dealer markups is likely to continue through this year, and higher process are probably permanent.
4. Digitalization is in the growth phase
While fully online transactions haven’t taken off to the extent initially expected, consumers have now grown to accept the option with many planning to embrace it. Cars.com survey results from December discovered that 38% of in-market shoppers planned to buy their vehicle fully online with another 38% expecting to fully complete paperwork online.
While benefitting customers with time savings, a customer beginning their purchase online is highly likely to be committed to a single dealership rather than shopping around.
5. The way people work affects car usage
A shift from traditional in-office work to WFH options has changed how people use their vehicles. Many are accumulating less mileage, which has the potential to extend the average length of ownership. As well, two-thirds of remote workers report running errands during the day rather than just evenings and weekends. Expect to see pressure for normal auto retail hours to shift.
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