Currently, the automotive industry faces a situation of high demand and low inventory at dealerships. Americans are buying cars faster than vehicles can be made or resold in showrooms across the country.

New and used car sales are soaring due to two factors: automakers are under pressure to increase production due to a shortage of computer chips, primarily caused by the pandemic. Moreover, the economy’s recovery, high savings, low-interest rates, and federal stimulus payments have elevated demand.

The demand for used vehicles is as high as the need for new ones, if not higher. Because of this, dealers and individual buyers are having difficulty getting vehicles. Some dealers are contacting former customers to offer them cash for cars they sold years earlier.

Recent data shows that used car prices have increased by 45% over the past year. The prices of new cars and trucks have been up about 5% over the past year.

Considering the factors contributing to the inventory shortage, it may be a while before things get back to normal. Alix Partners’ managing partner for automotive and industrial practices, Dan Hearsch, in an interview in November 2021, said:

“While there’s no guarantee the microchip shortage will end by year’s end, there are still some kinks in the chain that will delay manufacturers from returning to full speed for some time. Labor shortages in plants and ports where imports are unboxed, lingering concerns about COVID, including tensions in Malaysia where some parts are assembled, contribute to this problem.

” It will take some time for dealer lots to fill up, even if automakers ramped up production quickly.

First, newly manufactured cars will fill current orders from customers, followed by orders from car-rental companies and corporate fleet customers, after which excess vehicles will be sold to dealers to start evening out supply and demand.

He added that if things continue at an upbeat pace, it will take until the end of 2022. Otherwise, it will take until 2023.”

Dealership marketing and other innovative sales program have become less effective because supply cannot meet demand. Hence, there is no need for dealers to sweeten the deal.

This may lead to a disconnect between customer expectations and experience as inventory remains low, negatively impacting brand affinity and perception.

Given the backdrop, dealership marketing efforts may be better geared towards:

Creating an Emotional Connection Through Brand Individualism

Personalized experiences will always be in demand. People want a personalized experience when purchasing a home, a car, a vacation, or their favorite gadget on eBay. Consumers demand a customized shopping experience more than ever before.

As a result, dealership marketing must adapt to meet the new reality of retail-the digitization of everything. The advantages of digital marketing are that you can be personal without appearing intrusive.

We have more insight into consumers than ever before because of context-aware retargeting and advanced reporting; if you aren’t leveraging behavioral data to reach car shoppers, 2022 is the year.

Ensure that you will use the data you collect for personalized marketing. Customer data collection that goes unused can be annoying for your customers.

Name Recognition and Dealership Inventory Promotion

Another way to take advantage of the current low inventory is to focus on improving branding for your dealership. Customers remember brands that connect with them. Effective branding involves reaching customers personally and emotionally (as we mentioned above).

Better customer service can also boost a dealership’s brand quality. Proactive and transparent communication is key to delivering excellent customer service. Providing targeted information to customers should be done based on their individual needs.

For example, when a prospect has built and priced their dream car and is waiting for stock availability, they would benefit from regular updates on possible delivery dates. Such updates would keep them excited about their purchase.

Alternatively, an existing customer whose lease is ending and looking for a new car may feel anxious about not having a vehicle for some time. A customer in the transition phase may need more details about specific features to ensure the most satisfying customer experience.

Brands can turn consumers facing a challenging situation into brand advocates by determining their communication themes and customer priority.

To conclude, every situation affords an opportunity, and dealerships can leverage the current challenging environment to grow and work towards succeeding in the new year. They can achieve this by engagement, building proactive relationships, and sharing personal updates as the situation unfolds.

Follow The Eyes would be more than happy to have a conversation with you and your team. Call us today!