The automotive industry is experiencing some major changes right now, and a lot of this has to do with shifting consumer habits and the way the market works.
Ever since the COVID-19 pandemic hit in 2020, we’ve seen some big disruptions—production lines came to a halt, and supply chain issues have caused auto manufacturing to face challenges like we’ve never seen before. On top of that, ever-persistent microchip shortages have complicated things for modern vehicles that rely on advanced technology, and the lack of skilled technicians has led to longer wait times for service.
And let’s not forget the upcoming election casting a shadow of uncertainty over car sales, as suggested in a study by Cox Automotive: Approximately 75% of consumers expect vehicle prices to change after November. But this can go in either direction for car dealerships.
As the industry takes on a cautious “wait and see” stance, Lotlinx discusses the automotive industry trends that will help dealerships succeed in both uncertain and promising times, with the tail-end of the year fast approaching.
Cox Automotive’s annual forecast named 2024 “a return to normalcy” for the U.S. market. As we enter the back half of the year, we see that this prediction has turned true for auto dealerships.
In the latest Cox Automotive update, total inventory stood at 2.79 million units at the beginning of August, with a notable decrease in days’ supply to 68—a 43% drop month-over-month. This increase in inventory is partly due to the arrival of 2025 models, generating consumer excitement that may stimulate more interest in new vehicles.
While the rise in inventory gives buyers more choices, sales growth is still held back by high interest rates, even as inflation has dipped to its lowest level since April 2021. The industry’s return to normal also means dealerships need marketing strategies on vehicle availability, especially in light of past supply chain challenges.
Today’s consumers can access various options that fit their desired features and budgets. With cautious spending habits, many may lean toward used cars instead of new ones, so data intelligence for dealerships is important. They must watch market trends and consumer preferences to create targeted advertising that resonates with potential buyers.
The anticipated explosion of electric vehicles has met roadblocks, resulting in slower sales than previously forecasted. Despite investments and incentives, EVs currently account for one in nine cars sold in the U.S.—that’s only 11%.
Factors like charging infrastructure, driving range, and individual usage patterns still drive purchasing decisions. For example, even though most contemporary EVs can achieve ranges beyond 275 miles, easy, quick refueling at gas stations is still more appealing for long-distance drivers.
As advancements in battery technology and charging infrastructure continue to slowly progress, these obstacles are anticipated to lessen and motivate a larger movement toward electric and alternative vehicles. Dealerships can tap into this supercharging market with strategic EV markdowns and pricing tactics. Learn more in our recent blog.
Hybrids allow consumers to transition into the EV realm more gradually, alleviating some concerns surrounding fully electric vehicles, like range anxiety and charging infrastructure.
In fact, the slowdown of EV sales at the beginning of 2024 actually ignited a remarkable resurgence for hybrids, with their sales increasing five times more than EVs in the first quarter. This trend provides manufacturers with a big opportunity to pivot from their initial EV strategies to focus on creating more functional vehicles that align with consumer preferences.
The market for hybrids is growing, fueling good news for dealerships as potential buyers become more well-known. Hybrids have been around long enough for their market demographics and psychographics to be well understood, giving dealerships access to plenty of data.
This data can be used to build sophisticated AI models to better identify buyer demand. When located, this targeting becomes more relevant. Car sales professionals and managers who understand the role of technology and their data can convert leads into deals.
As the automotive industry shifts, dealerships are reallocating their marketing budgets to focus on performance-based strategies. This prioritizes measurable results over general brand awareness.
Digital marketing enables real-time tracking of engagement and conversions through social media analytics, email metrics, and targeted ads to make dealership campaigns sales-ready. This maximizes return on investment (ROI) and connects marketing with today’s tech-savvy consumers.
In the second half of 2024, digital advertising expenditures are projected to rise, showing a pivot toward performance-based marketing strategies. As more and more car purchases start online (despite 95% of transactions occurring at dealerships), dealerships must prioritize measurable campaigns that nurture leads generated through digital platforms.
The used car market is experiencing acceleration, with certified pre-owned (CPO) vehicles expected to lead sales in 2024. CPO sales are projected to hit 2.7 million units in North America, surpassing retail used car sales and suggesting a strong preference for organized offerings.
Increased inventory, up nearly 5%, paired with competitive pricing for vehicles under $30K, is drawing in a diverse range of buyers. Also, a 5.1% decline in used car prices YoY gives greater appeal to quality used vehicles.
The biggest car price drops in August 2024 were almost all SUVs. Compact models are gaining traction, causing a necessary price adjustment to keep its competitive edge. Dealerships should restructure pricing strategies to move these SUVs off the lot for less fuel-efficient variants.
The pandemic has pushed more consumers to start their vehicle research online, with 95% doing it before even stepping into a dealership. This shift means that dealerships need to step up their digital marketing efforts to stay competitive.
Through data analytics, they can understand consumer behavior and preferences, helping them identify popular models and features. Key parts of a solid digital strategy include website search engine optimization (SEO), active social media engagement, and targeted ads.
Website, social media, email, or ad personalization is what makes an impact on today’s consumers. Data intelligence helps dealerships customize interactions through various touchpoints, from targeted advertisements to tailored communications. This level of engagement creates meaningful connections with potential buyers and completely changes the buying experience, improving ROI and overall dealer profitability.
As artificial intelligence technology becomes more accessible, its application within automotive marketing and operations is burgeoning. AI can streamline processes, improve targeting accuracy, and provide VIN-level insights on pricing strategies versus market trends. Adopting AI-driven tools like Lotlinx VVO can motivate lead nurturing efforts.
For a more visual exploration of these trends and tips to stay prepared for the rest of the year, download this Lotlinx infographic: “9 Trends That Will Matter to Your Dealership“.
We may sound like a broken record, but the data doesn’t lie: adaptability is key to helping car manufacturers, and dealerships get through recessions, global disruptions, and post-pandemic challenges.
It’s the automotive companies who plan strategically, embrace innovative sourcing, and adjust pricing to fit the changing market that stay competitive in 2024 and solidify market positions into 2025. Lotlinx’s Quarterly Vincensus Report covers consumer trends in the automotive industry and more OEM-specific and dealership inventory, pricing, and markdown insights.
For more on auto dealership trends, contact Lotlinx and get a free demo on how our AI platform can help.
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