It’s no secret that the COVID-19 pandemic has wreaked havoc on supply and demand, production lines, inventory, and everything in between. The automotive industry was not immune to the consequences of this past year, and many are still trying to recover. At the start of the 2020 lockdown, many automotive manufacturers cancelled orders with the expectation of a drop in sales due to the “stay-at-home order.” To their surprise, the demand for their vehicles continued to soar, despite cancelled orders and an insane rise of sales in electronics. Because of this, the tiny chips needed to manufacture new vehicles were used to fulfill demand in other goods from computers, to home entertainment systems, to smartphones. In turn, automotive dealers are experiencing a crippling vacancy of inventory due to a shortage of these chips needed to complete the production of vehicles.
So, what does this mean for individual stores? For many dealers, cars are being sold before they even reach their lot. This has not only increased prices for new cars, but used car prices have skyrocketed up to 45%. Many stores that usually carry upwards of 1,000 vehicles at a time are struggling to keep inventory on their lot. Consumers are paying full-price for everything from basic cars to luxury vehicles. With sales being cut down to a fraction of years prior, it is essential that dealers make the most of every single deal, both used and new. Dealers should also be using this time to take to nurture other departments of the dealership, such as the service department, BDC, internet, etc.
Experts are predicting that shortages will begin to ease towards the fourth quarter of 2021 and the beginning of 2022, so even though it may take time to get vehicles manufactured and distributed, it is essential that dealers are prepared. As demand is predicted to stay the same, more inventory means that there will be more competition among dealers. This being said, being on top of your advertising game is a must. Not only will you need to make consumers aware of your store and your inventory, but your advertising should create an intense need for consumers to purchase from your store instead of the dealer down the street. Your creative, media buys, and market strategy should be top tier because any less won’t cut it. For an customized onsite market analysis from the DeAngelis team, call 800.318.5047. Be prepared for the next wave of automotive sales!