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Navigating 2024: Strategies for Automotive Dealerships While the results look good for consumers, dealerships that have been enjoying higher-than-normal profits over the past three years may be in for a rude awakening in the coming months. Some of the challenges Cox Automotive cites include: Slow economic growth and high-interest rates Increased vehicle supply and downward pressure on prices Shifts in the market, from sellers to buyers. Growth in the used and new electric vehicle (EV) market Changing consumer preferences and online buying trends These trends suggest a landscape transformation in the automotive industry, posing new hurdles and opportunities for dealerships. Based on Cox’s report, we’ve identified six key strategies dealers can use to navigate these challenges and position themselves for a profitable 2024. 1) Embrace Value-Centric Selling In a buyer’s market, differentiate your dealership with value-centric selling. Understand customer needs and highlight long-term benefits like fuel efficiency, safety, and resale value. Offer customization and focus on after-sale services for enhanced perceived value. Some additional considerations may include: Highlight the total cost of ownership, instead of allowing the customer to get hung up on the sticker price. Focus on the long-term benefits including fuel efficiency, durability, low maintenance costs, safety and reliability, and resale value. Consider personalization and customization that can enhance the perceived value of the vehicle. Focus on after-sale services and support through maintenance packages, warranty options, and customer support. A value-centric sales approach in auto sales helps build stronger customer relationships and leads to higher customer satisfaction and loyalty, ultimately increasing sales and building a positive brand reputation! 2) Enhance Financial Flexibility Flexibility is crucial in uncertain economic times. Adopting a range of financing options and dynamic pricing models to make vehicle purchases more accessible and appealing to customers, especially in times of high interest rates is your key to success. Some strategies dealers may want to consider include: Offering longer loan terms to reduce monthly payments for buyers can be particularly appealing in the high-interest rate environment we’re currently in. Balloon payment loans that involve lower monthly payments during the term of the loan, followed by a large “balloon” payment at the end. Offering flexibility in down payment requirements can also help buyers who have limited upfront cash. Adapting to the current economic climate by offering flexible financing options will help increase sales, customer satisfaction, and mitigate risk. 3) Leverage Digital Transformation In the current automotive market, digital transformation is not just an option but a necessity for dealerships aiming to thrive. With the evolving consumer behavior leaning heavily towards digital channels for information and purchases, dealerships must embrace and integrate digital technologies, especially in their marketing strategies. This shift isn’t merely about having an online presence; it’s about engaging customers where they are most active and making the most of the data and tools available in the digital realm. To be successful, consider: Utilize Advanced Customer Data Platforms (CDPs) that track customer data from various sources, including online interactions, service histories, and showroom visits, to create a comprehensive view of each customer. This holistic approach allows for highly personalized marketing campaigns. For instance, targeting a customer with service reminders based on their specific vehicle model and usage patterns or personalized offers based on their browsing history on the dealership website. Implement AI-driven predictive analytics that can be utilized to predict customer behavior and preferences, enabling you to be proactive rather than reactive in your marketing efforts. For example, AI algorithms can analyze a customer’s online behavior to predict when they might be in the market for a new vehicle or an upgrade, allowing the dealership to target them with timely and relevant offers. Additionally, AI can optimize pricing strategies in real-time, considering factors like market demand, competitor pricing, and inventory levels. Create immersive digital experiences for your clients that transcend beyond conventional websites and social media marketing. This could include virtual reality (VR) showrooms where customers can explore vehicles in a highly interactive and engaging environment, or augmented reality (AR) applications allowing customers to visualize different vehicle models and customizations in their own driveway. These experiences not only engage customers in a novel way but also provide rich data points for further personalized marketing and follow-ups. Adopting these digital marketing solutions can significantly enhance customer engagement and satisfaction by providing more personalized and relevant experiences. Furthermore, they can position your dealership as a forward-thinking and customer-centric brand, which is essential in today’s competitive market.

Car Dealership Trends for 2024 2023 was a strange year for car dealerships. On the one hand, rising wages allowed more people to purchase cars while supply chain issues and inventory challenges abated. However, many headwinds – including high interest rates and inflationary challenges – lead to major issues, as people look to replace old cars and get new ones. These broader conditions meant that car dealerships had to work harder and smarter than ever, and as you look to 2024, it is vital that you develop newer and smarter ways to prepare for the future. Here’s a look at what technology, sales, and economic trends car dealerships will likely face in 2024 – and what can be done to manage them. Slowly Rising Sales Expected While the broader economic situation has improved compared to where it was a few years ago, major challenges remain. Sales are expected to rise 2% in 2024. Many factors lead to this economic reality, including the continued rise of interest rates, broader inflationary pressures, and low unemployment rates. At the same time, easing supply lines and inventory means dealerships may be able to afford to be more lenient on prices, allowing them to attract customers and make more sales. This may allow dealerships to be in a better economic position. A rise in inventory means more car types will be available for customers who are in the market for a new kind of vehicle. What does all this mean to dealerships like yours? Slow and steady growth will allow you to advance in today’s market. However, customers’ tastes are changing, and they expect more flexibility and experiences when buying cars. As such, the nature of car sales is also changing, and dealerships should be prepared to match this reality. They can do this by: Enhancing the vehicle testing experience, allowing users to spend more time in cars and ensuring their comfort – particularly for cars that offer a newer experience. Offering customers, a more customized range of potential cars that fits their needs, provided that dealerships can access this information before a sales meeting starts. Meeting the continued growth in hybrid and electric markets. Continued rise in eCommerce. “Dealerships” like Carvana may have turned out to be an economic disaster, but that doesn’t change the nature of the car-buying experience is changing. Customers expect they should buy cars just like they buy food or electronics: Online and from the comfort of their own home or mobile device. This reality means traditional dealerships have to adjust their car-buying experience to ensure that they are giving customers these opportunities. For many car dealerships, switching to online buying is simply impossible. However, adding more e-buying opportunities remains a viable possibility. As such, your dealership needs: A highly up-to-date website that adjusts as your inventory changes A mobile-friendly website or app that allows a customer to begin a sales conversation and get more information about a car. Extremely detailed and accurate information about a car, including its condition, miles, price, and more. An idea of where your car is in the sales system at any given moment. Armed with all this information, you can ensure that you are giving your prospective customers the most valuable information about the kind of vehicle they are looking for, enabling them to at least begin the sales process online – if not complete it. Expanding Service Opportunities As noted above, the greatest threat to the continued expansion of sales in the car market is high-interest rates. With many customers still locked in on lower interest rates from an earlier era, it has become a real challenge for dealers to convince customers to let go of their lower interest rate loans in favor of greater interest payments. This means that customers are driving cars longer. However, all is not lost for dealerships, who now have an opportunity to expand their service centers and provide more repair options for their customers. By meeting these needs, dealerships can open up a new revenue source while also building brand loyalty.

Is Car Leasing Still Worth It In 2024? You’re here because you want to know whether or not it’s still worth leasing a car in 2024. And we’re going to be honest, there have been some ups and downs within the car industry over the past few years and we need to discuss them before we give you an answer. Let us first explain why you may have noticed car leasing prices increasing over the past few years. Hard times for the car industry over the past few years Since COVID-19, Brexit, the global semiconductor chip shortage and the Russo-Ukrainian War, things have been difficult. These issues, in turn, have affected the car industry heavily. With factory orders taking anywhere between 6 to 12 months due to factories running at low efficiency. And car parts being delayed due to the ongoing crisis in Ukraine, where lots of factories produce individual parts for manufacturers. These issues resulted in increasingly more expensive new cars and subsequently, car leasing prices increased across the board during these events.  As customers could not afford the higher costs of new cars, they turned to the used car market. And unfortunately (fortunately for some sellers), the used car industry saw a massive boom in value. With some used cars selling for more than they did when they were brand new while having 30,000 miles on the clock. Some manufacturers were even ringing up customers asking if they could buy back financed vehicles purchased through them, as they knew they could sell them for a bigger profit. At the time of writing this article, if you live in the UK, you will be very aware of the cost-of-living crisis which started back in 2021. This is causing customers to be more careful when it comes to spending their hard-earned money. Things are looking up now at least. We’re now at the tail end of the issues with COVID-19. And the Russo-Ukrainian War, although still ongoing at the time of writing this article, has been adapted to.  With most manufacturers having relocated their parts processing facilities away from Ukraine, which has made (most) parts delivery times normal again. The semiconductor chip shortage seems to have been alleviated, for the most part, which has fixed most vehicle and parts delivery times now. Now that you are caught up, we can get to the point of this article. Is car leasing still worth it in 2024? It might sound a bit biased, us being a car leasing brokerage, but the answer is yes. But rather than an outright yes, it’s more of a careful yes. A careful yes because, while car leasing is definitely still an avenue worth pursuing, you should be keeping an eye on lease deals that seem out of this world for now. Gone are the days of 2015 when you could get a Volkswagen Golf R lease deal for $399/month every week. But while those days are gone, the deals are not outright gone and have just become rarer. Unfortunately, because of the rarity, when these mega deals do come out, they are sold out very quickly due to them being excellent value and spreading quickly via word of mouth and social media. There have been some excellent car leasing offers that have sold out for us very quickly recently. And we’ll show you why below.

Driving into the Future: Key Trends Transforming Car Dealerships in 2024 As we usher in the year 2024, the landscape of car dealerships is rapidly evolving, shaped by technological advancements, shifts in consumer behavior, and a new economic reality. Let’s explore the trends that are defining the auto industry in this pivotal year. 1. The Electric Vehicle Revolution2024 has marked a notable surge in the popularity of electric vehicles (EVs). As the world becomes more environmentally conscious, car dealerships are increasingly stocking EVs and adapting their sales and service strategies to meet this growing demand. The transition from internal combustion engines to electric powertrains is not just a trend but a fundamental shift in the automotive industry​​. 2. Digital Marketing: The New NormalThe digital marketing revolution has taken center stage in 2024. Dealerships are now leveraging multi-channel digital strategies to engage customers. Utilizing social media, email campaigns, and digital advertising has become indispensable in attracting and engaging modern customers who spend a significant amount of their time online​​. 3. Adapting to Market FluctuationsEconomic factors such as fluctuating auto loan rates and consumer sentiment shifts have impacted the industry. Dealerships have adapted by refining their inventory and sales strategies, with a growing focus on used or more economical vehicle options, catering to a broader range of consumer needs​​. 4. The Rise of Online Vehicle PurchasingThe trend towards online vehicle purchasing has become more pronounced in 2024. This shift towards digital retailing in the automotive sector requires dealerships to strengthen their online sales and customer service. Embracing this trend is crucial for meeting the changing consumer buying habits and preferences​​. 5. Hybrid Vehicles as a Practical ChoiceWith the automotive industry’s gradual shift towards EVs, hybrid vehicles have emerged as a practical choice for many consumers. Dealerships are capitalizing on this trend by focusing their marketing efforts on the benefits of hybrids. This strategic emphasis is helping dealerships bridge the gap during the transition to a more EV-dominant market​​. 6. Data Security: A Top PriorityIn our increasingly digital world, safeguarding customer data has become a paramount concern for dealerships. Protecting sensitive information is not only a legal obligation but also a key factor in building trust and maintaining customer loyalty​​. 7. Efficiency and Cost ReductionWith the various challenges and uncertainties facing the market, dealerships in 2024 are focusing on improving operational efficiency and reducing costs. This involves adopting new technologies and management solutions that streamline operations and cut expenses without compromising on service quality​​. 8. The Integration of Software and Vehicle TechnologyIn 2024, software integration in vehicles is not just about infotainment systems; it encompasses the entire driving experience. Dealerships must adapt to the rise of Software Defined Vehicles (SDVs) which offer new features and services through software updates. Understanding these technological advancements will be crucial for dealerships to educate customers and offer relevant services. 9. Artificial Intelligence and Machine LearningAI and machine learning technologies are transforming dealership operations in 2024. From personalized customer service to predictive analytics in inventory management, these technologies offer tools for enhanced efficiency and customer satisfaction. Dealerships adopting AI-driven technologies will lead in innovation and customer engagement. 10. Sustainability and Eco-Friendly PracticesAs global environmental awareness rises, dealerships are embracing sustainability. This goes beyond selling electric and hybrid vehicles and includes implementing green practices in their operations. Embracing sustainability is not just environmentally responsible but also increasingly a customer expectation. 11. Adapting to Post-COVID Consumer PreferencesEven in 2024, the effects of the COVID-19 pandemic are still influencing consumer preferences. Customers now expect flexible buying options, including online purchasing and virtual vehicle tours. Dealerships adapting to these new preferences are finding success in meeting the evolved needs of their customers. 12. Evolving Dealership ModelsThe traditional dealership model is evolving in 2024, especially with the rise of direct-to-consumer sales models and online retailing. Dealerships are finding new ways to create value and differentiate themselves, focusing on unique customer experiences and specialized services. 13. Focus on Customer Experience and PersonalizationIn an age where information is readily available online, the in-person dealership experience is more crucial than ever. Dealerships are focusing on providing exceptional, personalized customer service and creating a unique dealership environment that attracts and retains customers.

What’s a Better Value in 2024, A New or Used Car? It’s a new year, but car buyers are still facing some of the same challenges. In 2024, the dilemma of choosing between a new or used car is influenced by several factors, including depreciation rates, interest rates, price trends, and the lingering effects of the pandemic. Let’s break down what you need to know to make the best decision in 2024. Key Takeaways: For most buyers in 2024, new car deals are more sensible due to lower financing costs and attractive incentives. Used car prices are declining but remain high, affected by the pandemic’s long-term impact on production. New cars offer appealing financial advantages with low APR offers and manufacturer incentives, despite their higher initial cost. The choice between new and used cars depends on individual financial situations and long-term vehicle ownership plans. Free resources are available to guide money-conscious drivers through car buying decisions. The automotive landscape has seen dramatic shifts in trade-in and resale values over the past few years. In 2024, a trend that began last year is continuing: used car prices are declining in wholesale markets, impacting trade-in values significantly. The era of purchasing a new car and flipping it for profit is over. Instead, we’re returning to the traditional pattern where new cars lose a substantial portion of their value as soon as they leave the dealership. Interest Rates Matter – New Cars Have Much Lower APRs This year, expect to see an uptick in subvented rates from captive lenders, as new car sales decelerate. Low APR offers are here to stay in 2024. Manufacturers are increasingly offering incentives to clear inventory, including surprising zero percent financing deals available in January. Despite stable interest rates, the high cost of loans remains a critical factor in the car market. Consequently, we anticipate a larger share of new car loans will be sourced through captive lenders like Hyundai Motor Finance, Ford Credit, and Toyota Financial Services. Towards the end of 2023, data from Cox Automotive showed an uptick in 0% APR offers. We expect this trend to continue into 2024.