In the middle of the most profitable period dealerships have ever seen, the American economy is uncertain at best. Economists are divided on whether it’s a downturn or the beginning of a recession. Automotive retail has always been robust and flexible in the face of economic adversity, but the best successes occur when dealers are poised to pivot. 

Lightico co-founder and CEO Zviki Ben-Ishay spoke with CBT News’ online editor, Jason Unrau, about the challenges facing the industry and vehicle retailers. 

Jason: Where do you see the economic downturn going in the short and long term? Is it headed toward recession?

Zviki: The top economics experts in the world seem to think that is the direction, but it isn’t clear how long it will be. That’s why it is important to prepare for the worst—and that is a lesson that you need to have learned at this point following the pandemic. Businesses of all types need to know that things can change rapidly, and you can’t assume that what worked yesterday will work tomorrow or the day after.

Jason: The auto industry has been resilient to economic challenges time and time again. How will this downturn affect the industry?

Zviki: It’s important to realize that we are coming into this economic downturn already in the midst of challenges to the auto industry – chip shortages, supply chain issues, etc. The significantly higher prices over the last year due to these issues, combined with serious concerns, inflation, and the like, could lead to a significant slowdown in car purchasing. On the finance side as well, lenders will need to find ways to mitigate increased risk of existing loans while at the same time still competing for new loans. 

Jason: Dealers and OEMs might be cognizant of the more obvious issues like lack of inventory and tighter financing. What areas might they be missing or not giving enough credence?

These issues are really the key. Obviously, one side is tackling this head-on – push for more inventory and create better partnerships with lenders to secure rates for your customers. 

However, the less obvious tactics might include ensuring that you’re able to market and sell what you do have in the way that customers want. For example, does your website have a full, detailed inventory of available vehicles, both new and used, that is user-friendly and appealing? Knowing that the dealership 15 minutes away definitely has the model I want while being unsure about the one 10 minutes away could easily sway who is coming in. 

The same thing goes for the F&I factor – can you make this smooth and easy? Can customers complete this on their mobile device on their own time? Or do they need to sit for three hours in the dealership to have to come back again to finalize things?

Jason: How does choosing your digital investment factor into the economic situation?

Zviki: It’s really the same formula as during good times. Analyze your weakest points. Where do journeys get broken? What takes the longest for your customers? At what point do you lose deals because things are complex or take too long? Being keenly aware of what are the most problematic aspects of the car vehicle purchase journey is absolutely critical. 

Then, when looking at tech that can help solve that, don’t just look at ROI. Time to ROI, meaning how long from deployment of the tech to an upside for you and your customers, is just as important, if not more. It might be that fixing a small aspect of the journey and seeing ROI could be a matter of weeks or a few months. That means the increased efficiency of that implementation can essentially pay for the next upgrade and the one after.  

In addition, and I can’t stress this enough, don’t ‘buy tech.’ Rather, ‘invest in a tech partner.’ It is incredibly important to find a tech partner that can help you not just implement their solution but continually optimize it as well as be aware of additional needs.

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