While the U.S. economy battles the potential of an oncoming recession, the automotive industry has already been combatting its own hurdles. It’s important to note, as Auto News points out, “the auto industry is often ahead of the rest of the economy in its cycles.” While the manufacturing and job connections of the sector directly impact the rest of the economy, the industry’s need to recession-proof itself is often times more internally driven.
Chip shortages, labor shifts, and other industry-specific issues have caused dealers to find innovative tactics to keep a red-hot market from dropping off significantly. Let’s explore a few ways your dealership can work to recession-proof your auto sales.
Recession-Proof Strategy #1: Cultivate
Digital Dealer likens auto sales into two methods: the hunter and the farmer. Hunters are deal-hawks who can aggressively close sales in quick bursts. Farmers, by comparison, nurture sales over time. When the potential of an automotive recession, whether due to shortages or financial squeezes, looms it can be a fantastic time to begin cultivating future sales opportunities.
Performing daily follow-up calls, confirming all appointments, implanting video messages whenever possible, following up with no shows, sending birthday congratulations—each of these are strategies are essential to buoying your sales during lulls. Covideo Dealer Services has a full-cycle solution set that addresses each of these and more. Video messaging, a set-it-and-forget-it triggered outreach, even vehicle service-related management are seamlessly provided with this robust set of tools.
Recession-Proof Strategy #2: Stay Informed
It’s one thing to know where current auto sales trends stand; however, having an understanding of where your industry is going is important for your entire team—sales, service, and marketing. When Congress passed the $52 billion in funding for chip and semiconductor production, did this has any impact on everyday-Joes’ attitudes on making a purchase now or holding off? This kind of information is key to your ability to navigate gaps and sales lulls.
While nationwide trends are notable, find ways to discover what your local market thinks and feels. Continual communication, not just about what vehicles on the lot look enticing, but on what factors are looming for your potential buyers can help you navigate the disconnect between the automotive industry’s self-contained economy and consumer perceptions and behavioral shifts within the larger economy.
While the overall numbers look promising for the industry, consumer and dealer attitudes ultimately decide the fate of economic trends. “My biggest worry from the dealers’ sentiment data is that the outlook is down and lower than the current market,” says Jonathan Smoke, Chief Economist at Cox Automotive.
Recession-Proof Strategy #3: Diversify Avenues
While the economic outlook can directly impact consumer spending, where consumers spend their money shifts, it doesn’t outright stop. Empower your dealership to understand buyer behaviors and proactively lean into consumer sentiments. If chip shortages and thin lots are discouraging new vehicle sales, incentivize buyers with used car options. If vehicle purchases ebb, most buyers are holding onto their current vehicles longer so service and maintenance opportunities increase. Tap marketing efforts to align your dealership’s offerings with the evolution of potential buyers’ needs.
While the automotive industry can operate in an insulated model that doesn’t follow lock-step with the overall U.S. economy in some instances, the reality is that consumer attitudes and behaviors are the driving force for automotive sales and dealership success. Awareness of where opportunities exist, how to cultivate them, and where to divert resources can allow your dealership to ride out dips and recession-proof your bottom line.
Take the guesswork out of this process with Covideo Dealer Services.