Navigating the Road Ahead TOP 5 CHALLENGES FOR DEALERS IN THE BACK HALF OF 2024 AND HOW TO SOLVE FOR THEM By ACV There’s no getting around it: the auto industry has been on quite a ride over the past few years. U.S. auto dealers face a myriad of challenges that require adept navigation and strategic planning. Since we’ve moved into the back half of 2024, several key issues have emerged or continue to plague dealers, demanding attention and innovative solutions. Let’s explore the five top challenges facing U.S. auto dealers and strategies to overcome them. 1. Pricing Pressures and Declining Value of Used Vehicles One of the prominent challenges looming over dealers this year is the increasing pressure on vehicle pricing, specifically the declining value of used vehicles. Factors such as oversupply, changing consumer preferences and the proliferation of ride-sharing services contribute to this downward trend, impacting dealers’ profitability and inventory management strategies. Solution: Embrace data-driven pricing strategies that leverage market insights and consumer demand patterns to optimize pricing decisions. Diversify inventory to include a mix of new and preowned vehicles, focusing on popular models with strong resale value. Enhance customer education efforts to emphasize the value proposition of pre-owned vehicles, highlighting cost savings and quality assurance measures. 2. Shifting Consumer Preferences Consumer preferences are evolving rapidly, driven by sustainability concerns, technological advancements and changing lifestyles. Dealers must anticipate and respond to these shifts to remain relevant in a competitive market. Consumers want ease and are willing to pay for it, dealers will be well rewarded to provide convenience to consumers. Solution: Embrace digitalization and offer omnichannel experiences to cater to diverse consumer preferences. Providing transparent self-service vehicle valuation, lowfriction consumer vehicle sourcing programs, and even picking up vehicles from the consumer’s driveway can give you the winning edge. 3. Regulatory Compliance Navigating the complex regulatory landscape poses a significant challenge for auto dealers, with evolving emissions standards, data privacy regulations and consumer protection laws requiring strict adherence. Solution: Stay informed about regulatory updates and invest in compliance management systems to ensure adherence to legal requirements. Ensure that everyone at the dealership knows compliance requirements by providing ongoing training to staff members to uphold compliance standards and mitigate regulatory risks effectively. 4. Digital Transformation The digital revolution has reshaped the automotive industry, with online sales platforms, virtual showrooms and digital marketing channels becoming increasingly prevalent. Dealers must embrace digital transformation to enhance customer engagement and stay competitive. Solution: Invest in robust digital infrastructure, including user-friendly websites, mobile apps and CRM systems, to streamline operations and improve the customer experience. Leverage data analytics to gain insights into consumer behavior and personalize marketing efforts effectively. By effectively using your customers’ data, vehicle data and pricing trends, you can meet them with the right car at the right time, even when they’re not actively looking to get into something new. 5. Talent Acquisition and Retention Attracting and retaining skilled talent remains a persistent challenge for auto dealers, with competition from tech firms and changing job preferences among younger generations complicating recruitment efforts. Solution: Develop comprehensive talent acquisition strategies that highlight the opportunities for career growth and professional development within the automotive industry. Foster a positive workplace culture that values diversity, inclusivity and employee wellbeing to attract and retain top talent. No matter the issues that rear their head, one thing will always remain true: Auto dealers are survivors who will always find creative solutions to power past challenges. By implementing innovative solutions and embracing digital transformation, dealers can navigate these challenges successfully and emerge stronger in an evolving market landscape. 26 California New Car Dealer Quarterly
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