Summer car sales are always important for auto dealerships’ annual results, and dealers have long depended on traditional summer car sales events, including always-popular Labor Day tentpole end of summer car sales events.
However, there’s never been a summer quite like 2020 promises to be thanks to COVID-19 disruptions. Dealers need to combine tried-and-true with brand-new to capture as much auto market share as possible in an unprecedented summer car sales environment.
A big piece of that is pent-up demand. Americans have always shopped heavily for cars in the summer, but even with the expected decline in year-over-year car sales figures, this summer will see an unusual amount of pent-up vehicle demand hitting the market. Millions of consumers who had to postpone planned purchases thanks to family financial disruptions, closed dealerships and paused OEM production will be re-entering the market this summer.
In this blog post, we share a summer car sales guide of best practices for 2020, broken down into some topical themes:
– Capturing the bargain-hunting car shopper
– Prioritizing pre-owned
– Adapting to the “new normal”
Being Ready For Bargain Hunters
Car shoppers are coming back. We’ve noted recently that an AutoTrader study found 9 in 10 new vehicle shoppers believe this is the best time to get a good deal on a new car. Now, the benchmark University of Michigan consumer confidence survey finds that consumers are continuing to become more optimistic, with their view of current economic conditions improving 6.7% between May and June and their expectations for the economy increasing by 10.9% in the same short period. While both figures are still down notably from 2019, this rapid improvement in consumer sentiment suggests that car shoppers won’t be the missing factor in 2020’s summer car sales figures.
All the same, we should anticipate many shoppers will be deeply price-sensitive and searching for summer clearance car sales. Widespread job losses played a significant role in this: According to Pew Research, the U.S. unemployment rate skyrocketed from one of the lowest on record in February to the highest unemployment the nation has seen since the end of World War II just two months later in April.
All told, more than 38 million Americans filed for unemployment as a result of COVID-19. Auto dealers’ F&I teams need to be sensitive to this reality and make sure they’re up-to-date on lenders’ programs designed to work with consumers who had short-term job losses or other income limitations.
Bargain-hunting shoppers are also going to be sensitive to OEM programs, even as many of them begin to sunset or decrease in scope. Ensure that your sales and F&I teams are on top of what’s happening with your OEM(s) in terms of production, changing product mixes, captive finance options and other relevant news.
Prepare to Profit From Pre-Owned
One of the biggest auto industry themes in the wake of COVID-19 is the massive changes affecting the pre-owned vehicle market. For many dealers, the end-of-year bottom line for 2020 will depend on how well they can effectively leverage the changing used car marketplace to drive pre-owned summer car sales profits.
In today’s environment, pre-owned profitability depends on centralizing customer and inventory data, simplifying marketing and sales processes and focusing on improving net profits through ROI gains. For more insights on these topics that you can use to improve your summer car sales profitability, see Mastermind’s whitepaper on the subject.
Adapting Your Dealership for the “2020 Normal”
You may have strategies that have served your auto dealership well in the past, such as summer clearance car sales or Labor Day sales events. In this most unusual of years, it’s critical that you re-evaluate what you’ve done in the past to ensure you’re connecting with shoppers how, when and where it will make the most difference in this new environment.
For instance, many dealers traditionally schedule marketing and sales pushes around tax time in April to connect with shoppers who have IRS refund checks in hand. But for 2020, Tax Day has been pushed back to July 15. While many taxpayers who expected refunds have already filed their taxes and received their refund checks, many others will procrastinate to the last minute out of habit and will be good targets for personalized marketing outreach. This year, Tax Day can be a summer car sales event.
Additionally, as many Americans begin to resume daily driving in the summer, business will begin to pick up on your service drive. Have you made sure your dealership’s service drive experience has been fine-tuned to provide an excellent customer experience in the wake of COVID-19 and that you’ve given it the structure and tools to play a critical role in loyalty sales and service-not-sold conquest?
Finally, it’s not just your customers who require some new thinking – your employees are dealing with the “new normal” as well. Is your team comfortable and ready to go? Do they feel safe in your auto dealership? Are they successfully executing a comprehensive reopening plan?