Repeated challenges to supply chain-driven inventory, vehicle market pricing and rising interest rates plagued dealerships last year, prompting U.S. and Canadian auto retailers to adopt a "strive to thrive" mindset during unprecedented industry and economic changes. Despite the shifts, 49% of forward-thinking dealerships surveyed carved a clear path to business success, according to market research by CDK Global Inc., an automotive retail software provider.
The 2023 Trendsetter’s Guide to Automotive Retail outlines obstacles encountered last year and highlights best practices by top store leaders who self-identified as the first to implement change in their dealerships. The trendsetters are setting the bar in the industry to produce positive operational and financial outcomes. The report takes a deep dive into technology’s impact on dealers and areas that they admittedly are not prepared for in the coming year.
“If there’s one constant in automotive retail, it’s that there’s always an unknown lurking around the corner, so the ability to adapt and thrive during these challenges is crucial,” said David Thomas, automotive industry analyst at CDK Global. “Our research showed how forward-thinking dealers have become within the past year in an effort to remain relevant among consumers and viable in the industry.”
Highlights from the Trendsetter’s Guide to Automotive Retail survey data include:
- Forty-four percent of dealers surveyed transitioned away from traditional sales to focus on improving the vehicle buying experience, with 50% of retailers using photos and videos to estimate service recommendations. By contrast, non-trendsetters over-indexed on reducing costs and changing pricing strategies.
- Over the past year, 48% of trendsetters enhanced their digital retailing, with only 36% of traditional dealers relying on it from their web channels.
- The delivery process has evolved to the sales representative walking through tech features, pairing a smartphone and helping download a manufacturer application for a customer’s car. As such, 70% of dealers surveyed said that investing in staff technology training had an extremely high impact on their overall business. Eighty-one percent plan to keep investing in it this year.
- Forging stronger partnerships with original equipment manufacturers shifted significantly higher, with nearly a third of dealers reporting it resulted in a strong operational impact.
Several of the industry’s top issues continue to cause challenges among dealers, who surprisingly were relatively unconcerned about them. The challanges include new online retailers and electric-vehicle service. At the top of the list was the direct-to-consumer model, which 46% of dealers said they were unprepared to manage.
“Dealers need to keep a steady pulse on economic and industry shifts for continued financial and operational success. Integration of new solutions and investment in staff will help create a significant, lasting impact to weather the unknown changes ahead,” Thomas said.
For more in-depth information on the survey results, visit the Trendsetter guide page.
Originally posted on Auto Dealer Today