How to Overcome Car Dealership Challenges
For car dealerships, some challenges remain the same: competition, a haggling reputation, and attracting new customers. With the economy and technological innovations in constant flux, it can be difficult for business owners in all industries to keep up with changes and meet challenges head-on.
Although rapid change can seem overwhelming, it’s important to remember the basics: evolve your business with changing technology, offer exceptional customer service, and give your customers what they really want. Here are some challenges you might be facing—and how to combat them.
1. Economic Factors
A slow slide in auto sales at the beginning of 2018 is indicative of a bigger problem: auto sales, as a whole, will be down in 2018. In fact, companies like Toyota and Nissan are already reporting lower sales. This could have to do with several different economic issues:
- Interest rates are rising. According to Forbes, at 5.2% in February 2018, interest rates are back up to levels that the U.S. economy hasn’t experienced since 2010.
- Cost of fuel is rising. Lower fuel prices give consumers more flexibility in their spending. These savings can be leveraged to make a new vehicle purchase. Recently, oil prices have spiked considerably which could prevent consumers from making those purchases they’d put on hold.
- Proposed tariffs could play a major role that increases steel and aluminum costs.
As a dealer, you can’t control the economy. Certain factors, like interest rates and oil prices, are pretty much outside of your control. However, you can make your dealership stand out from others during uncertain economic times by emphasizing the best in customer service, convenience, and ease of doing business. Today’s customers care about their experience. In fact, 86% of customers say that they will pay more for a better experience.
2. Ride-sharing apps like Uber and Lyft
Uber and Lyft offer several benefits to consumers: a convenient mobile app, prevention of impaired driving, and a way to efficiently get around in urban spaces. Traditional taxis aren’t the only ones to suffer from the surge in ride-sharing companies. Disruptive technologies and consumer shifts align with ride-sharing alternatives. This has already been identified as a burgeoning challenge for car dealerships.
These shifts are not showing any sign of stopping: there are estimates that it will be a $285 billion industry by 2030.
Technology is always going to create changes in the car dealership sector, but it also creates opportunities for growth. Even though there’s nothing you can do to stop the popularity of Uber and Lyft (especially in urban areas), the fact is that consumers are always going to need cars.
Technology and innovation can help you align with the growth and changes in how customers want to purchase an automobile. This will lead to happier, more engaged customers. Recognize that consumers use Lyft and Uber for greater convenience—and play to that desire for accessibility by creating a smooth, streamlined experience for potential buyers.
3. Customers’ Changing Expectations
As opposed to economic factors or the rise of the ride-sharing industry, changing customer expectations are one area in which car dealerships can take control. So what is changing in the way the average consumer approaches the car-buying process?
- From considering a car to making a final purchase, customers are making decisions more quickly than ever (especially in the United States). According to a recent Bain & Company report, it only takes nine weeks to complete this process. Car dealers need to work with the increased speed of the process.
- In the U.S. up to 83% of consumers will expect to have some type of online car-purchasing experiences, according to a study by Cox Automotive. To stay competitive, car dealerships need to be able to offer this service to customers.
- When it comes to making decisions, 85% of shoppers are more likely to buy a car from a dealership offering a digital retailing step. To capitalize on this, dealerships need to make sure that they have a robust online presence.
As a dealer, you’ve already adapted to changes in the market before. Coping with changing customer expectations is reasonably straightforward if you find a solution for effectively marketing and selling your cars online.
Apps like AutoFi integrate easily into your pre-existing website and allow your potential customers to search inventory, choose the car they want, find the best F&I products, choose their finance terms, and complete the transaction. All completely online, and integrated with your website.
As technology and trends in consumerism change, car dealerships face shifting challenges in selling cars. However, dealerships have opportunities to gain market share by evolving their business to align with customer experience expectations. If you’re interested in finding out how to overcome the new challenges—and make your dealership stand out from the rest—schedule a free demo with AutoFi.
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