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Automotive Retailing in the New Normal

Dealerships and the New Normal
Article Highlights:

  • 2013 was a year of increasing vehicle sales.
  • Dealerships that adjust to the "new normal" will thrive.

The following is an excerpt from the recently published white paper: Automotive Retailing in the New Normal.

When the dust settled after the flurry of automotive sales at the end of 2013, the industry had recorded another year of increasing vehicle sales—and by all accounts is poised for more this year.

Coming out of the recession, the automotive industry has steadily defied the odds year after year and continued its rapid march back to pre-recession sales levels of 1.6-plus million vehicles—where most analysts expect the industry to level off through the end of the decade.

Yet, compared to the last time the industry sold 1.6 million or more vehicles, there are fewer dealerships to sell and service those cars today. And industry observers don’t expect a dramatic increase in the number of dealerships to sell and service those 1.6-plus million new vehicles. In addition to the volume pressures that dealers face, they also face selling to consumers who now bring markedly different retail expectations when buying or servicing a car. Consumers expect an experience that’s information rich, engaging, connected, and as seamless as possible; an experience, in short, that matches other compelling retail experiences—whether it’s in the Apple store or online at Amazon.

Across the automotive industry, there’s a “new normal” that’s been created by the gap between vehicle demand and the number of dealerships to handle that demand, along with changing consumer expectations and profit pressures on the dealership. That, in turn, is changing the requirements for the technologies and services that will help dealerships operate more efficiently and profitably, reach customers more effectively, and deliver a retail experience that separates the dealership from its competitors and more closely matches the expectations that consumers bring to the shopping experience.

The dealers I speak with recognize this changed world and are looking for ways to gain an advantage in consistently delivering better business results and an optimal consumer experience.

Most are also grappling with whether or not they have the right tools and services—and comprehensive worldview—to compete most successfully in the midst of these new pressures and to grab new opportunities with customers.

As dealers answer those questions in the “new normal,” there are a number of underlying trends that have accelerated over the past several years that are continuing to shape consumer perceptions about shopping and buying and are putting added pressures on retailers—including dealerships.

  1. Mobile – anytime, anywhere information.
  2. Privacy – the more information that’s available to me, the more vulnerable my information is.
  3. Personalization – in the engagement with the retailer and in the vehicle I own.
  4. Friction-less – a comprehensive, seamless, and smooth consumer experience, from web to delivery to service.

In the “new normal,” the technology platform in the dealership will need to support a complete retail environment—inside and outside the four walls.

It will need to deliver the right information at the right time about the business and the customer so that dealership personnel can use the information as decision support to make the best decisions to improve the dealership’s operating efficiency and to enhance every interaction with the customers, transforming each one into a memorable “wow” experience.

The dealerships that achieve this will thrive in the “new normal,” growing their business, their customer base, and their profitability.

For more on this topic, download the full whitepaper: Automotive Retailing in the New Normal.

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Former President, Reynolds and Reynolds

Ron Lamb is the former president of Reynolds and Reynolds (2010-2017).

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