- The car dealership industry, worth an estimated trillion dollars in 2022, is segmented into new, used, and wholesale operations.
- Dealerships face challenges such as attracting and retaining customers, managing inventory, and cybersecurity threats.
- Outstanding customer service and value-add services can help dealerships attract and retain customers in the competitive marketplace.
- Equipping themselves with modern technologies, including digital marketing and CRM tools, can manage customer relationships effectively.
- Strategies like soft pulls, integrated data management, automated pricing solutions, and digital marketing can help dealerships thrive.
Opening up a car dealership requires a lot of time, money, and effort. Several moving parts must come together for a successful business, from hiring salespeople to obtaining inventory. However, despite all your hard work, there are still common challenges that car dealerships face today. Here’s a look into today’s car dealership industry, its challenges, and how to get ahead.
The Car Dealership Industry
It’s estimated that the new car dealership will be worth a trillion dollars in 2022. This means the total sales of new cars, used vehicles, parts, and services add up to one trillion dollars.
Car dealerships are typically segmented into three categories: New car dealerships, used car dealerships, and wholesale operations. The market for new car dealers is growing as customer demand for different models increases due to more options becoming available. Used car dealers are becoming increasingly popular as they offer more affordable options.
Challenges Faced by Car Dealerships
Car dealerships come with their own set of unique challenges. Here are some of them:
1. Attracting and Retaining Customers
One of car dealerships’ biggest challenges is attracting and retaining customers. Customers are much more informed these days thanks to the internet, which makes them less loyal. Standing out in a crowded marketplace requires dealers to have a unique selling proposition beyond just price. Building relationships, offering outstanding customer service, and creating a memorable and enjoyable buying experience is key. Offering value-add services like car maintenance and repair, insurance, and roadside assistance will also help attract and retain customers over the long term.
2. Managing Inventory
Managing inventory is another common challenge for car dealerships. While having too much inventory can lead to high carrying costs, not having enough can lead to lost sales. Balancing this is critical to success. Car dealerships need to predict market trends and customer preferences and know how to acquire vehicles that sell quickly and profitably.
3. Keeping up With Technology Changes
With rapidly evolving technology and competitors trying to edge them out, car dealerships must stay updated with the latest tech trends to stay ahead of the curve. This includes utilizing digital marketing to stay competitive in the crowded digital landscape where audiences have less attention span. It also entails having modern mechanical tools for diagnosis and repair and a CRM (customer relationship management) tool to help store and manage customer data and re-engage with them.
4. Managing CRM Effectively
Speaking of CRM, dealership owners should not underestimate the impact of proper customer data management on sales. Over the years, a sales representative will have lots of customers’ data, including emails and phone numbers, that could lead to future sales. CRM should be properly maintained and managed. Moreover, the dealership should sell tailored services and products to these customers.
5. Cyber Security Threats
Lastly, car dealerships face cybersecurity threats just like every other business. But it’s been found that more and more cybercriminals are targeting auto-dealerships, specifically today. Customer data can be high in value, subjecting dealerships to cyber threats. Therefore, dealerships should instill strict cybersecurity procedures to avoid data breaches and secure vulnerable systems like Network Bank and CRM.
How to Get Ahead
Thankfully, there are various ways to get ahead today. Here are four ways to do that.
Soft Pulls
Customers lacking the necessary loan credit to purchase a car can lead to inefficiencies in your sales. This is why you can use the soft pull solution. It lets you get the customer’s credit score and report without a hard pull. The difference is that the credit score and report obtained from soft pull won’t leave a footprint on their record, which benefits customers. This helps determine whether the customer qualifies for the loan, leading to faster turnaround times.
Integrated Data Management Solutions
Integrated data management solutions offer dealerships a variety of tools to help manage customer relationships, track sales performance, monitor inventory levels, increase efficiency in service departments, and more. These systems are designed to help dealerships manage their data more efficiently and effectively.
Automated Pricing Solutions
Automated pricing solutions allow dealers to set competitive prices on new and used vehicles without compromising profit margins. It also helps them keep up with market trends, helping them stay ahead of competitors.
Digital Marketing Strategies
Digital marketing strategies are essential for dealerships to reach larger audiences of potential customers. Utilizing various digital marketing tactics like SEO, content marketing, social media advertising, email campaigns, influencer outreach, and PPC will help you generate more leads and build brand awareness online.
Car dealerships can advance in today’s competitive market by leveraging the right tools and strategies. Implementing these solutions can make a huge difference in their overall success.
