Earlier this month, the National Automotive Dealers Association (NADA) released its analysis of two studies recently conducted, including one that involved interviews with consumers and another that involved interviews with dealers. The studies give us some insight into the mindsets of both groups and how dealers can use the data to maintain and grow their businesses.
The major issue dealers are facing is how to sell the inventory they have if their vehicles aren’t exactly what customers are looking for. Low inventory, worldwide parts shortages, and ongoing supply chain problems are continuing to plague the auto industry, so trying to influence customers to purchase other trims or models is now a critical step instead of an optional one for dealers.
Customer loss is always a risk for dealers, and the recently released studies confirm this. A total of 42% of consumers looking for a new vehicle reported they would be open to visiting a different dealership, and 22% reported they would be open to visiting a dealership selling the same brands. Perhaps the most important finding, though, is that 14% of customers are willing to go to the competition and visit a different brand’s dealer altogether.
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Incentives can motivate loyalty
NADA stressed the importance of incentives, stating that “incentives are a tried-and-true strategy for motivating behavioral change.” NADA noted an earlier study that found that six in ten respondents said their decision when purchasing or leasing a vehicle could be impacted by incentives. Dealers currently seem to have a different view on incentives, though, as only a quarter of them reported they would utilize some form of incentive to get their customers to purchase another trim of the model they are looking at. In contrast, over three-quarters of customers said they would at least consider a more advanced trim if offered incentives.
Gift cards seemed to be an approved incentive, as around 40% of respondents said they would be influenced by them, even for those with a salary over $150,000.
These findings all impact dealers greatly, as there is a wealth of information they can gather from them that will help them continue to make sales and keep customers. Dealers always want to push new or certified used inventory as well as try to encourage larger and/or more advanced models of their brand, but now they must be extra vigilant that customers are not lost. The recent studies show that incentives are key, and more dealers might want to start using them.
NADA said another factor dealers must come to understand is how long customers are willing to wait until the vehicles they want are on the lot. Dealers reported that they felt 58% of consumers would wait, but only 28% of consumers reported they would actually be willing to order a vehicle and wait. Dealers must understand there is a greater sense of impatience than they may project, and it is important to acknowledge consumers’ sense of urgency when looking for a vehicle.
While most customers come to a dealer looking to buy now or within the next few months, dealers may also want to find ways to encourage them to order and wait for the “perfect” vehicle they are looking for. This could include providing pricing incentives or some other type of offering such as a few free maintenance visits or oil change once the car arrives.
Ultimately, the goals and methods of car selling have not really changed but have magnified and become more difficult with ongoing shortages all across the industry. Dealers who do not currently have the exact vehicles people want need to find ways to retain their customers by doing whatever they can to either find a compromise or encourage them to wait for the vehicle they want.
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