With the automotive industry rapidly recovering while simultaneously evolving to changing consumer buying habits, a once-niche segment has become more top-of-mind for OEMs: electric vehicles

Growing commitment from the federal government to tackle climate change has led to EVs dominating the headlines in recent months. At the same time, electric vehicle sales reached record levels in 2020 according to IHS Markit, more than tripling the segment’s retail share in three years. 

But with electric vehicle registrations only representing about 1.8% market share in 2020, some auto dealerships are still hesitant to embrace an all-electric future, with their hesitance perpetuated by past negative experiences or long-held misconceptions about the future of electric vehicles. 

In this blog post, we’ll examine the facts surrounding future dealership opportunities related to electric vehicle sales to debunk three common myths, including:

• - A fully electric future is far off 

- Electric vehicles aren’t popular enough with consumers

• - Dealerships can’t sell electric vehicles

Myth #1: A Fully Electric Future is Far Off 

While previous forecasts related to future electric vehicle sales failed to meet expectations, improved infrastructure, new government mandates and a continued increase in consumer demand has reaccelerated OEM investment in EVs. According to forecasts from IHS Markit, nearly 25% of all light passenger vehicles produced will be plug-in capable by 2030.

IHS Markit also finds: “The automotive industry is on the verge of a ‘step change’; a personal transportation evolution the likes of which has not been seen since internal combustion engines replaced the horse and buggy.” 

Between now and 2025, more than 100 new EV options are expected to be introduced, coinciding with recent OEM investment in electrification to reach carbon neutrality. 

In January 2021, automotive giant General Motors announced their intention to go all electric by 2035. Volvo unveiled plans to produce and sell only electric vehicles by 2030, following Jaguar’s commitment to go all-electric by 2025. These announcements come as pressure from politicians mounts against President Joe Biden to set a firm date to phase out internal combustion engines by 2035. 

Myth #2: Electric Vehicles Aren’t Popular Enough With Consumers

The success of electric vehicles isn’t purely tied to government mandates – consumer adoption of EVs also reached new heights in 2020. 

But not every dealership saw a surge in electric vehicle sales last year. According to data from IHS Markit, EV adoption in 2020 was largely led by DMAs on the west and northeast coast. San Francisco for example, saw EVs grow to 11% market share in 2020, while Chicago led the Midwest region at 1.5%. 

Overall, U.S. sales of EVs are set to exceed a 3.5% overall market share in 2021 and climb to a more than 10% share in 2025, according to IHS Markit. Globally, IHS Markit forecasts EV sales to grow by 70% in 2021. Repeat buyers will be critical to this growth.  

While historically most industry conversations have focused on market share, OEMs are paying closer attention to automotive loyalty to provide insight on consumer behavior. In 2020, EVs achieved record high loyalty rates, with IHS Markit loyalty data finding more than half of EV households that return to the new vehicle market acquire another. These record high loyalty rates demonstrate both substantial segment growth and increasing consumer acceptance. 

Myth #3: Dealerships Can’t and Won’t Sell Electric Vehicles

There was once a time that electric vehicles were somewhat of a novelty. They were slow to charge, had a ridiculously short range and worst of all, they were nearly impossible to sell – used or new. Since then, a number of major changes have taken place, including expanding EV infrastructure.  

Some complaints still persist from dealers and consumers alike. On the buyer front, research from Daimler finds most negative EV opinions stem from a lack of information. Unsurprisingly, the less people knew about electric cars, the more they disliked them.

Not only can dealerships sell electric vehicles – they want to. In a recent blog post, the President and CEO of NADA, Mike Stanton, challenges the myth that franchised dealers are unwilling to sell EVs, citing Cadillac as a real-world example of changes implemented by automakers to shift dealers’ perception of EV sales.  

In 2020, Cadillac announced new requirements for dealers who plan to sell vehicles beyond 2022, requiring dealerships to go all-in on the brand’s electric future and invest $200,000 on needed equipment, training and tooling – or take a buyout.  

In the end, 80% of Cadillac dealers agreed to work toward selling EVs exclusively, while the 20% who accepted buyouts did so widely due to years of negatively trending sales in their market or other economic considerations – not the electric mandate. 

“And so, in one fell swoop, America’s Cadillac dealers completely debunked the myth that franchised dealers don’t want to sell and service electric vehicles,” writes Stanton. “Because if this myth were even remotely true, virtually every Cadillac dealer out there would have gladly taken the buyout, and done so in a heartbeat.” 

Following years of infrastructure updates, technological advancements and consumer education campaigns by OEMs, car buyers are increasingly embracing the future of electric vehicles, offering invaluable opportunities to dealers who can attract and retain their business long into the future. 

There haven’t been many years in history where the auto industry outlook has gone through such wild swings as 2020. Auto industry trends – and especially auto industry sales trends – have been thrown into disarray by broader societal factors.

This makes predicting the rest of 2020 a difficult challenge, but one that dealers need to closely follow and consider as they plan their own operations for the remainder of the year. There are new opportunities in the evolving automotive marketplace for dealers prepared to take advantage of them. 

In this blog post, we look at some of the big questions surrounding auto industry trends in 2020, including:

• – What are the industry-wide predictions for new vehicle manufacturing and sales numbers in 2020?

• – How is the COVID-19 pandemic changing automotive consumer behavior and preferences?

• – What do these auto industry trends mean for dealers?

Finding Silver Linings in Auto Sales Outlooks

It’s not news to dealers that shocks to both consumer demand and manufacturer supply have driven auto industry sales downward, creating a challenging auto industry future outlook for the rest of 2020.

In April, IHS Markit released a global light vehicle sales and production forecast for 2020, predicting a 22% drop in sales across the worldwide industry from 2019 levels, with a 26.7% drop in North America alone. While this is obviously not news dealers want to hear, the worst seems to be behind us, with a 47.9% SAAR decrease in sales in April improving to a 29.8% deficit in May. This same trend applies to service drive profits, with major auto groups reporting some improvement in service profits in May as compared to April and March.   

Adapting to Vehicle Inventory Challenges

That current auto sales decline is tied into a predicted 19.6 million vehicle decline in global manufacturing from 2019’s 88.9 million vehicle production total. In North America, that production decline was on full display in April, as OEMs built just 4,840 new vehicles. 

By now, most automakers have gotten at least partly back to work, with automakers like GM and Ford cancelling their annual summer shutdowns in an effort to make up lost production efforts. However, new vehicles are still slow to trickle into dealer showrooms, creating inventory challenges for dealers as customers try to take advantage of attractive 0% financing options.  

This auto industry trend comes at the same time as used vehicles are flooding used car lots from rental car companies impacted by COVID-19 closures. These newer and lower-mileage cars entering the marketplace are creating an attractive opportunity for dealers as defleeted vehicles usually have low reconditioning costs and can be a source of solid profits while the new vehicle pipeline refills.

Looking at the Bigger Picture of US Auto Sales Trends

The larger reality is many U.S. auto industry trends in 2020 are the result of broader societal trends related to how and where people are working – and how they’re getting around. For instance, at various points over the past few months, public transit ridership has been reported to be down 90% in New York City, 70% in Los Angeles, more than two-thirds in Salt Lake City and Seattle, more than 50% in the Tampa Bay area and Indianapolis and 25% in Houston. The question for the auto industry's future outlook is how many of those riders will return to transit, and how many will instead purchase cars to meet their mobility needs.

The U.S. Centers for Disease Control and Prevention is currently adding to the complexity of this issue. The CDC has released guidance that suggests workers drive themselves to work rather than take transit or carpool as the safest mode of commuting.

Changing Consumer Car Buying Behavior 

Beyond where and how much Americans drive, it remains to be seen how the pandemic will change Americans’ product preferences, but some trends are beginning to arise. 

While much of the news surrounding U.S. auto sales is grim, the reality is there are still going to be millions of consumers in the marketplace for a new or used car. Many consumers only postponed their shopping during stay-at-home orders, and as cities and states begin to reopen their economies those shoppers are broadly going to be re-enter the marketplace.

However, they may not make the same purchase decisions as they would have before the pandemic. Lost income and lagging economic uncertainty are leading to changes in car buying behaviors. For instance, a Cox Automotive survey finds that 31% of buyers have reconsidered their preferred vehicle body style due to COVID-19, citing better gas mileage as the leading influential factor. These same economic limitations are ushering some customers into the pre-owned market who otherwise would have been shopping for new vehicles. 

These changes in automotive consumer behavior spell big opportunities for auto sales conquesting efforts in the coming weeks. According to data from IHS Markit, 9 million nomadic households, defined as shoppers who have no meaningful brand or dealer loyalty, will be in-market for a new car in 2020, but dealers need to act fast to take advantage of these opportunities.

What This Means For Dealers

If 2020 has taught us anything, it’s the degree to which even the best and most thoughtful auto industry trend predictions can be upended by the reality of the next morning’s headlines. This creates obvious challenges for car dealerships trying to make plans for their business and devote resources to the future.

One immediate step dealers need to take is investing time, effort and resources in building a customer experience-focused dealership culture supported by tools and capabilities that allow your people to be as efficient and effective as possible. Is your marketing based on data and real-time insights that predict consumer behavior, or are you just “spraying and praying?” Does your dealership reporting give you the insights you need to be an effective manager and leader? Are your digital tools up to the demand of being the new “front door” of your sales operation? Have you connected your service department to sales and are you effectively marketing your service drive to increase your service conquest leads? Does your F&I experience make your customers more or less likely to want to do business with you?

Rather than betting on one auto industry trend, dealers have the opportunity to focus on what they can control by ensuring they have the fundamentals in place that will carry them through whatever the future may hold. 

Disruption isn’t new in the auto industry. Brands – and OEMs – rise and fall, new technologies change the game, consumer preferences shift and external factors like interest rates and gas prices can make dealers scramble to adapt to a suddenly changing marketplace.

In recent years, some of the single biggest automotive industry trends revolve around the rise of digital tools that empower both consumers and dealers to know more and engage more effectively – if the right tools are used in the right way.

In this blog, Mastermind explores the digital future of the auto industry and looks at how modern digital tools are:

- Getting consumers into – and out of – the market for a new vehicle at unprecedented speed

- Simplifying the already challenging process of engaging prospects through digital marketing

- Making the dealership customer experience more important than ever before

Pre-Purchase Car Research Condenses Time-in-Market

One of the most important automotive industry trends is the degree to which car shopping online has changed the relationship between dealers and consumers. While purely online car sales have not yet materialized to the degree that many predicted, the breadth and depth of information and capabilities online have armed consumers with more information and insights than ever before.

Today's digital-savvy car buyers are increasingly looking for objective, third-party sites during their car buying  journey. According to a 2019 study by Cox Automotive, third-party sites are the most used of any online resource for car shopping and research, with 80 percent of all car buyers visiting third-party sites during the shopping process.

Additionally, the availability of online tools has shortened the process of buying a car. According to Cox Automotive, the time spent shopping and researching a vehicle purchase continues to go down as consumers get more online tools to automate and accelerate the process. Between 2017 and 2019, the average amount of time consumers spent shopping and researching a new vehicle purchase shortened by more than a half hour, from 13 hours and 48 minutes to 13 hours and 6 minutes. It decreased even more for used vehicle purchases, from 15:07 to 14:12, a decrease of almost an entire hour in just two years. 

Cutting the amount of time that consumers spend shopping and researching contributes to decreasing how long they’re in the market for their purchase, eliminating an average of 22 days from time in market, from 118 days in 2017 to 96 days in 2019.

The Changing Face of Automotive Digital Marketing

This means it’s more important than ever before that car dealership digital marketing is as targeted as possible. And in today’s digital environment, “targeted” means more than simply having the right prospect. It also means having the right offer, delivering that offer at the right time within the constantly shrinking window of opportunity of the consumer being on the market and then connecting in the right format that meets the consumer where they are. 

In digital terms, this means that in order to give their customers the best online digital car buying experience, dealers need to make sure their digital dealership marketing is powered by predictive analytics tools that deliver communications tailored to the devices your customers are using. It’s not just identifying which prospects are on a computer, which use tablets, and which are doing their research on smartphones. Cox Automotive’s research into car sales trends found that more than half of car buyers today do their research on multiple devices. Almost 60 percent use a smartphone to shop for a car, but more than three quarters use a desktop or laptop. While tablets such as iPads are becoming less common as phones become bigger and more powerful, they’re still used in a quarter of digital car sale experiences.

Elevating Dealership Customer Experience

In our digital world, consumers know what they want, they know how they want to be treated – and they’re not shy about sharing with all their friends and connections when a dealer (or any other company) doesn’t meet their expectations. Here at Mastermind, there’s one fundamental common factor we see in dealerships that are thriving in today’s marketplace versus those that are struggling: Their commitment to delivering a great customer experience.

Digital connectivity and capabilities are a double-edged sword for customer experience in the dealership environment. They’ve increased customer expectations for personalized service, but they’ve also given dealers tools like Market EyeQ that provide the necessary capabilities to meet (or exceed) those expectations. 

Consider this: According to PwC, nearly 80 percent of American consumers value speed, convenience, knowledgeable help and friendly service as the most important elements in a positive customer experience. 

Market EyeQ – or any digital tool – can’t make your staff any friendlier. But it certainly can make the process of buying a car faster and more convenient. It can also ensure your sales and F&I teams have all the information and insights they need to provide personalized and knowledgeable service.

Those capabilities extend beyond the sales floor and F&I room to the service drive and other fixed ops opportunities for consumer engagement. Through ongoing engagement and digital analytics, dealers can continually connect with customers to identify new opportunities for revenue while deepening the customer experience relationship and building long-term loyalty.

Are you trying to navigate digital disruption in the auto industry and position your dealership to engage and win in this new environment? Contact us to find out how Mastermind’s combination of auto industry expertise and digital excellence is driving results for dealers of all types and sizes.

Marketers rank high-quality data as the number one factor driving performance success. Have you invested in quality automotive marketing data at your dealership, and in turn, are you taking action based on what the data is telling you about your customers? 

Dealerships are no strangers to metrics or dashboards, but all too often the only figures that leadership and staff use in performance analysis are future auto sales targets and rearward-looking figures, such as conversion rates. 

What if your dashboard didn’t just tell you where you’ve been and where you need to go? What if it helped you understand how to get there and where to start? In this blog, Mastermind helps take your dealership reporting to the next level with insights into:

- How integrating your DMS and sales platform opens new possibilities

- Benchmarking improvements by looking at every stage  of the car sales process

- Comparing your brand and model performance to in-market competitors

• - Ensuring return on your sales platform investment by evaluating each salesperson’s usage and opportunities for growth

• - Leveraging predictive analytics to create a forward-looking view of your dealership’s performance

DMS-Sales Integration Drives Insights

We’ve written before about why data-driven sales platforms are critical tools for auto dealers in today’s marketplace: 

• - They deliver new insights about dealership customers and prospects

• - They help dealers be more proactive in sales and marketing

• - They make the car sales process more efficient

• They improve customer’s dealership experience 

• - They’re a critical tool for growing customer loyalty.

When it comes to dealership performance analysis, auto dealer software like Mastermind’s Market EyeQ provide a wealth of insight into all aspects of how the sales cycle is performing in your dealership. Your dealership is much more than just sales, so for the most comprehensive and useful reporting it’s critical to ensure your sales platform is integrated with your DMS.

Connecting the marketing and sales expertise of your sales platform to mission-critical data factors such as cost accounting, labor cost, inventory, pricing and more ensures your reporting isn’t artificially siloed into “sales and marketing” and “everything else.”

Understanding Your Dealership’s Sales

It’s easy for dealership leaders to get so focused on hitting sales targets that they fail to pay attention to other critical metrics that have a real impact on their bottom line. A comprehensive dealership dashboard ensures some of those metrics are being measured and reported, which encourages teams to work to improve them.

Some examples of these comprehensive sales metrics include per-sale profit and marketing ROI, both of which get to the heart of making your dealership’s operations great not just at selling cars, but at doing so profitably. These metrics also demonstrate the value of integrating your DMS into your sales platform, as your dashboard will need data from both to generate these insights.

It’s also important to generate these kinds of metrics not only for “sales,” but also for loyalty, service conquest and market conquest customers. Among other factors, a reliably profitable and high-ROI service-not-sold conquest operation is critical to running a profitable service drive in today’s automotive marketplace, and insight into those factors helps both sales and service leadership manage their operations accordingly.

Watching the Competition

Motorsports drivers wouldn’t win many races if they didn’t pay attention to where the other drivers on the track were and what they were doing. Just the same, your dealership won’t do very well in a flat sales environment where growth comes at your competitor’s expense if you’re not watching what they’re doing and where they are or aren’t succeeding.

That’s why Mastermind’s reporting tools integrate Market360 reporting, giving you competitive dealership insights into what brands and models are selling in your local auto market. It lets you benchmark against the competition and identify opportunities to capture market share against a weak competitive product or improve your selling against a strong competitor.

Improving Sales Staff Individual Performance

It’s obviously critical to report on and review individual salesperson numbers. Are they hitting their sales targets? Beyond that, powerful reporting tools help you understand why salespeople are or are not hitting their sales targets and where there are opportunities for improvement and growth. Are they great at loyalty relationships but have challenges closing new customers? What’s working for them, and what isn’t?

One key tool Market EyeQ includes in the salesperson evaluation process is a user-by-user analysis of how each of your salespeople is using the data and analysis tools of Market EyeQ, including how well each is tracking to the Behavior Prediction Score®, whether on their own or compared to the rest of your sales team. Are they using the auto dealer solutions you’ve invested in and are they getting the desired results? When combined with reporting tools that break out Market EyeQ-driven sales and profitability, the result is a comprehensive set of insights that make you a more effective manager of your critical sales functions.

Dashboards fueled by data from across your dealership and informed by best practices and predictive analytics can transform your dealership performance analysis from just looking at what has already happened into a forward-looking view of what’s going to happen in the future. 

If you’re interested in seeing what kind of insights Mastermind’s reporting tools can bring to the way you run your dealership and manage your team, contact us for a free demonstration.

If you’re reading this post, it’s safe to assume you’ve spent time working at an auto dealership and you know how important leadership qualities are to day-to-day business and end-of-year bottom lines. And if you’re in a leadership position at a dealership – or would like to take that challenge on some day – you likely wonder what makes some dealership leaders so effective in their roles while others are ineffective at best…and harmful at worst.

At Mastermind, we spend a lot of time with leaders from dealerships and dealer groups of all types and sizes, allowing us to see some of the best dealership leadership skills in action. In this blog, we’re stepping away from talking about software, data and analytics (mostly!) for a moment and sharing some thoughts from our experiences and the experiences of some of the most famous business leaders of all time, including how to:

- Hire the best employees for your dealership

- Do your job and trust your team to do theirs

- Build a dealership culture that people enjoy being part of

How Your Dealership Can  Avoid the “Bozo Explosion”

As a leader, one of your key responsibilities is to hire great people. It’s a relatively straightforward concept at its core, yet hiring talented people who are also a fit with your culture can pose challenges for leaders, especially when it comes to specialized roles where it often seems there aren’t enough “great” people to go around.

One mistake too many leaders make – especially new managers, who are often uncertain about whether they’re prepared to succeed in their new responsibilities – is failing to identify and find the people who are so good they could do your job, potentially even better than you could.

It’s a truism in business that “A’s hire B’s, and B’s hire C’s” – in other words, managers tend to hire people slightly less impressive than they are, whether out of not being able to appreciate better candidates’ qualities or out of fear that they would open themselves up to competition.

At Apple Inc., CEO Steve Jobs refined this concept, arguing that truly great employees – the “A’s” – would hire people as good or better than they were. But Jobs also warned that B’s would hire C’s, who would in turn hire D’s, leading to what he memorably called the “Bozo Explosion” that would occur in any organization where leadership didn’t maintain an ongoing and rigid focus on recruitment standards.

Nobody wants to lead a “Bozo Explosion.” Make sure you’re not only hiring people who will push you to be even better at your job than ever before, but that they’re doing the same in turn.

The return on hiring people better than you is immense. As legendary advertiser David Ogilvy would tell new managers while building Ogilvy & Mather into one of the first global ad agencies: "If each of us hires people who are smaller than we are, we shall become a company of dwarfs. But, if each of us hires people who are bigger than we are, we shall become a company of giants."

Do Your Job, Not Theirs

Possessing great leadership qualities doesn’t necessarily mean you have to handhold your team. Some of the most famous leaders in American business history agree that one secret to their success was simply not interfering when the great people they hired were doing the jobs they’d been hired to do:

• Berkshire Hathaway chairman and legendary investor Warren Buffett: “This approach seems elementary: if my job were to manage a golf team –  and if Jack Nicklaus or Arnold Palmer were willing to play for me – neither would get a lot of directives from me about how to swing.”

• Auto industry giant Lee Iacocca: "I hire people brighter than me and get out of their way."

• Apple CEO Steve Jobs: “It doesn’t make sense to hire smart people and tell them what to do. We hire smart people so they can tell us what to do.”

In a dealership environment, one of the quickest paths to disaster is to have leaders who don’t let the people they’ve hired do the jobs they were hired to do. It’s a fast track to employee dissatisfaction, poor performance, unhappy customers and missed metrics. Those with great leadership skills understand their role is to make sure the job gets done not by doing it themselves, but by putting the right people in the right roles with the right resources to do their jobs.

Ask yourself: For every metric you’re holding someone responsible for meeting, do they have the skills, resources and authority to do what needs to be done to meet that metric? If they lack any of those three key factors, then the fault is on you as a leader.

Oftentimes, dealership leaders see employee training as a hassle, an expense or a certification requirement that gets in the way of doing business. While it’s certainly an investment of time and resources, part of being a great dealership leader is getting to know and understand your people and their skills, then identifying the places where they could accomplish even more if they had the training necessary for personal and professional growth. Automotive leadership training can yield profitable results. According to Gallup, talented leaders contribute about 48% higher profit to their companies than average managers.

When it comes to resources necessary for doing the job, don’t just think about tools, desks or funding. In today’s dealerships, the most important resource is information. This is why Mastermind’s Market EyeQ is such a powerful automotive marketing tool for dealer leaders, as it spreads that critical resource throughout the dealership to everyone who needs it.

Once you’ve ensured your people have essential training and resources, it’s easier to give them the authority they need to make day-to-day decisions. Great leaders ensure nobody on their team ever has responsibility without the necessary authority, or authority without the attendant responsibility. You can’t make every decision, but the people who are making decisions must be accountable for the results.

Build a Dealership Culture You’d Want to Join

In the same shareholder letter where he talked about hiring skilled people and then getting out of their way, Buffett also noted the importance of building a team of people you like and enjoy spending time with: “We intend to continue our practice of working only with people whom we like and admire. This policy not only maximizes our chances for good results, it also ensures us an extraordinarily good time.  On the other hand, working with people who cause your stomach to churn seems much like marrying for money – probably a bad idea under any circumstances, but absolute madness if you are already rich.”

Today, we call this “culture,” and it’s arguably your most important job as a leader.

We’ve written previously about the importance of culture in dealerships. We focused primarily on customer experience, but no dealership with a terrible employee experience can deliver on a great customer experience. You can tell when you’re at a store or office where the employees are there begrudgingly and are taking their unhappiness out on the customers. Your dealership is no different. It’s very difficult for your employees to dedicate themselves to your customers’ happiness if they don’t feel that same commitment from you in return.

Are you giving your team the training and tools they need to do their job…and do it well? Contact us today to schedule a free demonstration of Market EyeQ and learn more about how it can help you enhance your leadership skills through reporting, accountability, and giving your team the ability to work efficiently.

U.S. auto industry trends aren’t very positive these days with auto dealers watching forces beyond their control put a damper on dealership sales and profits. But while the global auto sales industry forecast is largely negative, a slate of exciting new vehicles and advances in the ways dealers identify, engage with, sell to, service and retain customers mean it’s not all gloom and doom for auto sales in 2020. In this blog, Mastermind shares insights on: 

- The automotive sales forecast for 2020

- Emerging revenue opportunities for car dealers 

- New vehicles and model updates in 2020 

2020 Auto Sales Forecast 

2019’s auto sales trends haven’t been great, with the industry down by 2.4 percent in July and on trend through September for sales numbers to finish below 17 million in sales for the first time since 2014. Even China saw its first-ever decrease in new-vehicle sales.

The industry has also been hit by the UAW’s strike at General Motors, which has had repercussions at dealerships and throughout the supply chain.

At the international level, the trade war between the U.S. and China has had a broad array of impacts on the auto industry, while many economists and other experts are predicting the global economy could slide into recession in 2020.

Some industry watchers believe that even without major economic shocks such as an expanded trade war, labor unrest or broader recession, there are still a few lean years left for the auto industry, in what IHS Markit has called a “declining plateau.” For instance, Merrill Lynch senior auto analyst John Murphy predicts that the soft auto industry market will continue softening through 2022, bottoming out at 14 million vehicles per year. Meanwhile, Moody’s Investors Service researchers predict a 0.9 percent decline in auto sales in 2020, with the potential for recovery in the following year.

However, there could be some hope for car dealerships on the horizon. During an Automotive Press Association luncheon in October, NADA 2019 Chairman Charlie Gilchrist announced the organization’s support for the United States-Mexico-Canada Agreement (USMCA), calling it a “win” for dealers.
“Congress should pass USMCA to preserve competition in the auto industry and to enable dealers to continue providing affordable vehicles to millions of Americans without interruption—and they should do so expeditiously,” said Gilchrist.

If implemented, the agreement would ensure the continuation of tariff-free exchanges of vehicles and auto parts across North America.

New Revenue Opportunities for Dealers

A McKinsey and Co. analysis of new vehicle sales found that while sales prices have been largely flat in real terms since 1998, the constant stream of new technologies and features has continued to drive per-vehicle profit margins down across the industry. In combination with the average customer loan amount hitting record highs, there are real concerns about affordability being raised industry-wide. Only by searching out and embracing opportunities for efficiency in their operations have automakers and dealers alike been able to maintain their bottom lines.

If dealers aren’t making as much money on new vehicle sales, many will try to make up the difference in fixed ops revenues, including collision repair. This trend is already gaining traction, with parts and service revenues growing from slightly more than $80 billion in 2002 to more than $116 billion in 2018. 

But there may be challenges ahead there, as well: AlixPartners predicts that as self-driving cars and collision avoidance technologies continue to mature, collision repair revenues will fall as there will be fewer collisions to repair. While many of these technologies are a few years off from widespread deployment, AlixPartners’ researchers predict a six percent drop in aftermarket collision repair revenues between 2025 and 2030.

However, the service drive and body shop also offer revenue opportunities beyond just parts and repairs. By treating the service drive as a source of leads, dealers can tap into a well of high-quality conquest customers who will likely be in the market for a new vehicle in the future, which can make a critical difference on a dealership’s bottom line.   

2020 New Car Models  

Auto dealers know that while external economic issues certainly matter, the biggest factor for their business is what’s sitting on the showroom floor. From this perspective, the 2020 future looks bright.

A steady parade of new and updated cars, trucks and SUVs are arriving in showrooms for the 2020 model year. The list of new car models includes a little bit of everything: New and updated flagship SUVs, refreshed high-volume sedans, electrified versions of well-known platforms, high-tech performance vehicles, the return of beloved nameplates and some new competitors are already making their 2020 debuts. Of the dozens of new vehicle models slated for 2020, standouts include the all-new Audi Sport EV, BMW 2 Series Gran Coupe, Land Rover Road Rover and Porsche Taycan Cross Turismo. Of course, there’s still plenty of time for unexpected announcements and surprise debuts. 

With so much change on the horizon for the 2020 auto industry, now is the time to ensure your dealership is prepared to weather whatever comes your way in 2020 and beyond. Do you have the right automotive data solutions in place to ensure that you’re identifying and effectively selling to every possible customer no matter how competitive the marketplace gets? Can you be confident that your customer experience capabilities ensure that you’re retaining every customer you want to keep, while being strategic and effective in conquesting the best prospects from your competitors?

Contact us today and learn how the Market EyeQ sales platform can help your dealership evolve to meet the challenges of tomorrow. 

When the topic of “artificial intelligence in the automotive industry” comes up, most people probably have visions of autonomous vehicles humming through city streets, picking up and dropping off riders and cargo with no driver at the wheel. But while that vision still may be accurate in the future, there are plenty of other ways in which AI has been revolutionizing the auto industry for years, with more to come. In this blog post, automotiveMastermind discusses:

- How AI is used in the auto industry beyond bringing autonomous vehicles to the roads

- Why dealers integrating AI see real results

- How the utilization of AI in targeted marketing campaigns helps close more deals

Automakers and Suppliers Embrace AI Early

Auto manufacturers and larger suppliers embraced AI relatively early in its commercial availability, recognizing its potential in processes that involved data mining, pattern recognition, problem solving, extrapolation and other functions at which AI excels. AI systems were quickly proving their worth in such areas as supply chain optimization, demand prediction and production planning, preventive maintenance management, consumer research and segmentation, warranty program oversight, manufacturing quality control and more.

On manufacturing shop floors, the rise of AI-enabled industrial robots and adaptive manufacturing is revolutionizing the process of making vehicles, especially when combined with machine learning-based quality control systems that use neural networks to constantly improve their ability to identify defects.

AI Integration in Dealerships

But while OEMs and their supply chains have been transforming key functions through AI for some time, it’s only recently that dealers are following suit. And as with virtually every other industry and within other automotive segments, dealers who are ahead of the curve in AI integration are seeing real bottom-line results that deliver a meaningful advantage over their competitors.

To understand what this looks like, consider a standard new customer lifecycle and how AI revolutionizes it.

It starts long before a customer ever walks in the door, when data mining tools dig into public and proprietary data sets about all the potential customers in a given marketplace – not just those who fit a traditional demographic – and use a scoring system to identify the best prospects and the appropriate products for them.

Instead of advertising and direct mail based on broad demographics, AI-powered dealer marketing campaigns are highly individualized and targeted, personalized to appeal to the specific factors that were pulled out of the data and brought that prospect to the front of the line.

There’s far more to AI-driven marketing personalization than a mail merge making sure the prospect’s name is added to the offer. Rather, these tools allow dealers to automate the delivery of the right message, to the right person, at the right time, with an offer unique to them.

Often, these systems are so effective they identify and engage potential customers who haven’t even realized they’re in the market for a new vehicle, just as the AI-powered predictive systems at Amazon or Netflix are able to present you with products or movies you didn’t know you wanted – yet.

Applications of AI in Dealers That Help to Close Deals

Once the customer is in the door, AI systems support dealer sales teams by providing them with simple and relevant digests of what those systems have learned about the customer, what the interactions have been like, what they can likely afford and what talking points will have the most impact. With access to credit report databases, the systems can even generate proposed deal structures that take a customer’s own finances into account.

Once the sale is made, dealership AI systems generate value for service departments by managing maintenance programs and integrating relationship marketing to improve customer experience (CX) and increase dealership loyalty. These tools also help turn service drives into high-powered conquest tools by applying much of the same data mining and sales potential scoring to service-only customers and arming sales teams with the tools to engage service customers with personalized offers when appropriate.

We don’t know exactly what the future of AI-powered automobiles will look like, but there’s no denying that the AI-powered auto industry – or auto dealership – is running smoother than ever before.

Interested in learning how to implement an AI-powered sales platform at your dealership? Contact us today for a consultation.

Using data to help your sales staff truly understand their customers and anticipate their needs will lead to a better overall experience in your dealership. In this article, automotiveMastermind builds on an airline analogy to help showcase the need for a holistic approach to dealer customer experience (CX):

• - While all facets of an airline staff work independently, much like your dealership, the work is interwoven in the eyes of the customer

• - Provide your team with resources, capabilities and authority to build a great CX

• - Drive customer loyalty through consistent CX

The last time you took an airline flight, how was your customer experience? What goes into answering that question for you – and what does it tell you about your dealership’s customer service?

On your last flight, was the check-in disorganized or understaffed? Were the flight attendants unable to provide the beverage you requested during in-flight service? Maybe the airplane restroom wasn’t clean enough, or your baggage took too long to arrive?

Did you walk away happy, or not?

An airline’s gate staff, flight crew, aircraft maintenance and baggage claim functions are as operationally independent – if not more so – than the marketing, sales and customer service teams in your dealership. But just as you instinctively assess your experience with an airline as a totality of how you felt in every facet of that process from your first interaction to your last; so too do your customers feel about their experience with your dealership. Just as you think of “the airline” without stopping to assess the different operational areas by which they divide themselves, so too do your customers think of you as “the dealership” without differentiating between marketing, sales, finance, or service.

A Holistic Approach to Dealer Customer Experience

It is critical for your entire organization to have a holistic view of customer service, based on the concept that a customer’s experience – “CX” – is as unified for you as it is for them. That means while you may keep operational areas separately managed, those divisions – and the handoff between them – need to be as seamless and invisible as possible to your customers. This happens with careful analysis and planning of the entire customer experience, through dedication to building a customer experience culture and through providing your team with the resources, capabilities and authority to deliver those experiences regardless of where that customer is in your organization at any given time.

Use Data to Understand Your Customers

This all begins with understanding your dealership’s customers. In the old days, the mantra told us to “Know your customer.” That’s still true, of course, but it’s no longer good enough to end at simply knowing who they are. In a world where your TV recognizes what you want to watch, your GPS can predict where you’re going when you get in the car and Amazon knows what you’d like to buy before you do, your customers expect you not just to know who they are but also to understand their wants, needs, interests, expectations and concerns.

It’s admittedly ironic that the path to understanding your customers as unique individuals for whom you tailor customized experiences starts with the impersonal logic of databases and machine learning, but there’s no other way to accomplish that objective at the kind of scale a dealership requires. The more your employees know about a customer and the more context they’re provided by the automated tools that do the homework for them, the better they’re able to understand that customer and interact with them in a way that maximizes their customer experience and cements their relationship with your organization.

Be Consistent

However, simply having the right information about a customer and having people in place who are engaged in using data to provide great customer experience isn’t enough, if the experience isn’t consistent. Just as the example of your experience with all the facets of an airline shows how one underperforming component can sour an entire experience, so too can an under-performing part of your dealership.

Nobody credits the airline with getting to the gate on time or remembers the smiling flight attendant who gave them an extra bag of peanuts. Similarly, your marketing could be on point, your sales process a joy and the vehicle delivered in pristine condition with a smile – but if the finance process was painful and impersonal, that’s what your customer will remember. You can’t afford to tolerate any under-performing component of your dealership when it comes to customer experience, because that’s what will end up defining the experience your customer remembers and limiting the potential of your future relationship with them.

Build from the Foundation

Great dealer customer experiences build loyal, high-value customers. They’re the foundation of a sustainable dealership model that lets you protect existing market share while you use the same digital capabilities that underpin your CX operation to expand your marketing reach and conquest new customers. But just as your airline can do everything right except lose your luggage and expect you to walk away happy, neither can you afford to depend on some areas of greatness to counterbalance pain points for your customers.

Where are your customers not having a great experience – and what are you doing about it? Are you ready to truly understand your customers and ultimately sell more vehicles? Contact us today for a VIP consultation.

Shaping company culture around the customer experience is what led Amazon to become one of the most successful companies of all time. In this article, automotiveMastermind covers why dealerships should adopt this method to drive dealer customer retention and how they can do it with three tips:

- Instill a culture built on great dealership customer experience

- Manage the dealership culture you defined

- Recognize and reward employee engagement

What makes customers want to buy a car from your dealership? What makes them repeatedly brand and dealer loyal?

These are simple questions with enormously complex answers. One consistent theme underpinning the entire dealer-customer relationship is CX, or customer experience. And while there are a variety of factors that play into customer experience, the constant across all of them is that at the end of the day, it’s the human interactions between your dealership staff and your prospects and customers that matter more than anything else. That’s a reflection of your dealership’s culture, which doesn’t always happen organically. It takes devotion along with consistent and effective management – and leadership by example – to instill, grow and maintain such a culture in any business.

Creating a culture that delivers a great car-buying experience is worth the work because that experience is what sells cars and keeps a dealership’s customers coming back, in good times and bad. Customers want to do business with people they like and who treat them well. When that happens, they’re far more likely to become loyal repeat customers who make an outsized impact on your bottom line year after year and sales cycle after sales cycle.

Instill a culture built on great dealership customer experience

How do you instill the type of culture where customers are valued and appreciated and where the customer’s experience is the most important factor in any decision? It starts with defining it and setting expectations for employee engagement. How do you expect people to operate in your dealership? How do you expect them to treat each other and the customer? How are they empowered in their pursuit of doing the right thing?

For example, Amazon’s workplace culture is famously competitive. In his first letter to shareholders after taking Amazon.com public in 1997, Jeff Bezos talked in depth about his plans for building a company for the long term during a time of great industry change. This included setting cultural expectations for Amazon’s employees: “When I interview people I tell them, ‘You can work long, hard, or smart, but at Amazon.com you can’t choose two out of three,” he wrote. Amazon also publishes and holds its managers to a set of “Leadership Principles” that promote its desired culture, including its famous “Customer Obsession” – “Leaders start with the customer and work backwards. They work vigorously to earn and keep customer trust. Although leaders pay attention to competitors, they obsess over customers.”

You may not believe Amazon’s unique culture would be right to transplant into your dealership, but one core lesson from their success is it’s your job to define your desired culture, explain it and then manage to it as part of a broader go-to-market strategy.

Managing the dealership culture you defined

Once you have culture defined and explained to your team, the management component is critical to turn words into reality. You can’t do good work without the right tools, and you can’t expect your team to deliver meaningfully personalized service to your customers if you don’t arm them with the tools to do so. This means investing in analytics-driven capabilities such as database access for consumer insights, credit transparency tools, targeted marketing campaigns, service history integration and other solutions. These tools allow your team to do their homework and come prepared to make the right offer, at the right time, for the right vehicle and at the right price.

Customer experience is about human interactions, but the best human interactions take place when the employee has all the information they need ahead of time to meet the customer’s unique needs.

Recognize and reward employee engagement

If you show your employees you’re serious about investing in a customer experience-driven culture and giving them the tools to do it right, then they’re more likely to take it seriously and become a part of making that culture a reality. Without that kind of visible commitment, your staff likely won’t take your commitment to customer service seriously – and neither will the customers with whom they’re interacting.

When your employees do get it right, reward them quickly and meaningfully. Famed General Electric CEO Jack Welch joked that employee recognition should involve “the right mix of plaques and cash,” and that’s been a part of the standard dealership management toolkit for decades. Culture is more than sales numbers, so don’t just reward on sales metrics or other financial targets.

In addition to those kinds of recognition, make the effort to find ways to reward the behavior that values coworkers and customers. Recognize and reward creativity in solving customers’ problems, covering for coworkers who have family emergencies, staying late as needed without being asked, showing respect for customers’ unique needs and the like.

At the end of the day, you’re trying to create a culture in which your dealership demonstrates that it cares about its customers, at every possible opportunity, because a dealership full of people who truly care is the kind of dealership customers stick with for life. So, reward people for demonstrating that they care, and for doing their part to grow that customer experience-driven culture.

The more employees know that healthy and positive behavior is rewarded, the more they will embrace your culture and become partners in growing the kind of environment in which great customer experiences are born, and one where the bottom line grows along with the relationships you build.

Are you serious about investing in a customer experience-driven culture? Contact us today to learn how a data-backed automotive sales platform can drive exceptional customer experience.

Automotive sales forecasts are leaving many dealers feeling less than optimistic about the future of dealership sales. In order to remain profitable in a flattening market, dealers must keep a pulse on everything that’s happening in the industry. In this post, automotiveMastermind dives into the automotive industry trends from Q1 2019 that dealers need to be aware of, including:

• Dealership Lots Overflowing Due to Underwhelming Vehicle Sales
• Divergent 2019 Retail Strategies from Tesla & Porsche
• A Scarcity of Automotive Service Technicians

Underwhelming Vehicle Sales, Overflowing Lots

What:
As car retail sales slowed across the auto industry, the number of vehicles on dealers’ lots hit an all-time high this quarter. Even famously “recession-proof” brands such as Jeep have suffered, posting consecutive monthly sales declines.

Why:
NADA and others continue to sound alarms over vehicle affordability, which means not only sticker shock but also financing challenges for consumers. Dealers need to make sure their marketing and sales efforts include a data-based view of a prospect’s financial situation, ensuring they’re not investing resources on an offer a customer can’t afford or other unqualified leads.

That’s why Mastermind built a relationship with consumer credit experts TransUnion, so information can be built into the consumer relationship as early as possible. When combined with data-based marketing outreach that looks at every potential customer in the market to score and identify the bestprospects for a targeted and individualized marketing and sales campaign, this model of analytics-based selling is the fast lane to meeting month-end targets and moving vehicles off the lot.

Tesla and Porsche Take Different Retail Roads

What:
Two premium automakers announced very different strategies for their retail footprints as 2019 got underway. While Tesla made news saying it would roll back its already-sparse retail footprint, Porsche unveiled plans to invest in the customer experience at its dealerships to connect consumers even more closely to the brand.

In a blog post and SEC filing, Tesla said it was “shifting sales worldwide to online only,” and that “Over the next few months, we will be winding down many of our stores, with a small number of stores in high-traffic locations remaining as galleries, showcases and Tesla information centers.”

Meanwhile, Porsche was accelerating in the opposite direction, unveiling a “Destination Porsche” retail concept that makes its dealerships “not just a place to transact business, but a place that you would want to come in and soak up Porsche culture,” according to company COO Joe Lawrence. This includes holding motorsport-watching parties, hosting local Porsche owner group events and other related content. This announcement came after the ninth consecutive year of U.S. sales growth and seventh record sales year in a row. Porsche North America sales set a record of 57,202 vehicles.

Why:
Both Porsche and Tesla have passionate consumers, but the two companies have deeply divergent views of the dealership’s role in building and maintaining that relationship.

Porsche treats the dealership as a critical part of its customer relationship, winning its luxury segment in the 2019 J.D. Power Customer Service Index. Its intention with “Destination Porsche” is to make the dealership a place consumers want to be, making it the center of a rich customer experience that goes beyond sales or service, and builds opportunities for engagement to increase loyalty and amplify customer retention efforts.

Tesla, however, acts as if the dealership – or “store,” to avoid state dealership laws – is almost a necessary evil, stressing all Tesla sales take place online. Even though CEO Elon Musk wrote, “stores and Tesla product specialists and owner advisors will always be of critical importance to our long-term success,” his view of the dealership role is highly transactional: “Many potential Tesla owners will still want to talk to a Tesla representative in person or want a test drive from a Tesla representative,” he wrote, adding, “Stores also have a small number of Tesla vehicles available to drive away immediately for customers that want a car right then and there.”

Tesla appears to view the retail footprint as a cost center rather than a revenue generator. This was clear when it announced a change in plans not long after its initial store-closing announcement, saying it would “keep significantly more stores open than previously announced” but that “As a result of keeping significantly more stores open, Tesla will need to raise vehicle prices by about 3% on average worldwide.”

Tesla delivered its first car in 2008 and introduced its first mass-market model in 2012, while Porsche has been selling cars to consumers since 1948. To date, Tesla has been almost entirely in conquest mode and had little need to engage in retention marketing. As the company matures and its customers start reaching the end of their ownership cycles, it will be interesting to see whether Tesla’s model for minimizing the dealership role in the automotive industry is a sustainable bet and whether making a vehicle purchase “not much harder than ordering an Uber,” as Musk put it, is all that’s necessary to keep customers coming back.

Service Technicians Stay Scarce

What:
Auto Dealers are having a hard time hiring and keeping automotive service technicians. One estimate from NADA is that between retirements and career changes, dealers need to hire roughly 76,000 technicians a year just to keep up with demand. The U.S. Bureau of Labor Statistics predicts there will be 45,900 more service techs needed in a decade.

Dealers still appear to be attracting qualified technicians by offering more than other employers:
According to the Bureau of Labor Statistics, the median salary for a service technician at an auto dealer is $43,180, compared to $37,420 at collision shops or independent repairers or $33,640 at tire stores or parts & accessories shops.

Why:
The dealership service experience is critical for a customer’s overall satisfaction and customer retention. The right number of qualified, capable technicians is a huge part of that, without enough of them, customers wait longer for repairs, often resulting in customer dissatisfaction. Also, Under-qualified techs are also more likely to fail to complete a quality repair, leading to return visits that can cause harm to a customer’s satisfaction with the dealership.

It’s not news to dealers that service tech recruitment and retention is an important part of the business, but with a bleak hiring landscape stretching out a decade or more, there’s no better time than now to make a serious commitment not only to retaining the techs you have, but also to finding innovative ways of recruiting more to meet the needs of the future.

All of this should occur as part of a comprehensive overhaul of the service department’s place in the dealership, integrating the service drive as a sales driver and making analytics-based contact with a customer, a regular part of the service drive process.

How Can Mastermind Help?

Do you have questions about how car sales trends are changing the customer experience
process? Contact us today to learn more about how Market EyeQ can help your dealership identify, communicate with and close more buyers in your market.