May 20, 2022

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The Car & Automotive Devotees

Car Sellers Urged To Keep Advertising. ‘Dealers Need To Stay Engaged’ Say Experts. | Story

3 min read

There may be fewer cars and trucks on sales lots, but advertising remains an important piece of local dealers’ future. That is the message from the 12th annual Cox Automotive Car Buyer Journey Study.

“Dealers still need to stay engaged and top of mind with the customers,” said Vanessa Ton, Senior Manager of Research and Market Intelligence at Cox Automotive. “We see that if they are not advertising, they are going to lose out on sales. There’s also going to be a softening of loyalty of consumers.” Cox research found that dealers that cut their ad spending between 50% and 89% experienced a 28% decline in sales.

The latest study finds two-thirds of consumers were highly satisfied with their shopping experience, down from the record high set in 2020 at 72%, when inventory was more plentiful and favorable incentive programs were offered. Yet three-quarters of vehicle buyers in 2021 said they were highly satisfied with the dealership experience.

“We also see some frustrations in the sense that this chip shortage has caused inventory shortage so consumers are having harder time finding the right vehicle — and we do see that there are some inflated prices,” said Ton. “Despite these challenges, consumers are still very motivated to buy.” She credits that to a strong economy, lower unemployment, and a resurgence of vehicle ownership as people opt to avoid public transportation and ridesharing services. That is opening new advertising opportunities.

“The survey says there is going to be a 50% growth as more consumers say they are going to be driving more in 2022. With more miles and more usage of the vehicle, we think that service visits are going to significantly increase,” said Ton. “So definitely consider some type of advertising around service to help stay top of mind and yield more revenue overall,” she advised dealers during a webinar this week. Ton noted that half of service visits were promoted by the service provider, making it even more critical for dealers to market themselves. “It also helps them protect loyalty,” she said. “Among those who got car serviced at the dealership, 43% are loyal to the brand.”

The report also suggests there are limits to the role digital sales — and potentially marketing — will play in vehicle sales in the future. Despite the pandemic, Cox Automotive says the percentage of mostly digital buyers dropped from 20% in 2020 to 18% in 2021. And the amount of time people spent shopping for a new car or truck shrank last year, in part because there were fewer options to consider. Buyers reported spending just under 12.5 hours researching and shopping for a vehicle in 2021, down 46 minutes from 2020, according to the CBJ Study. But among people who did their car browsing virtually, the survey found that those consumers were less likely to be shocked by high sticker prices and disappointed with their options.

“One of the ways to stay engaged would be to promote more pre-orders, Ton recommended. “Say you don’t have the right vehicle with the right specs right now but if you put that order in it will help you get the right vehicle.” She said Cox’s survey showed that 37% of shoppers said they are willing to wait up to six months for the right vehicle.

New Car Prices May Have Peaked

There may be some relief in store for buyers in the coming months. Not only is there hope that chip shortages will ease, but Kelly Blue Book reports that the average new vehicle transaction price was up 12.5% from a year ago — but it slipped 1.8% month-to-month in January to $46,404. It was the third consecutive monthly decrease.

“The surge in new-car prices appears to have peaked,” said Cox Automotive analyst Michelle Krebs. “Yet, while we expect vehicle supply to improve, it will continue to be tight particularly through the first half of the year. Because of this, we expect prices to remain high for the foreseeable future, but car shoppers can rest assured we don’t anticipate any more record highs.”

Analysts say new-vehicle supplies have held steady since Thanksgiving. But because customer demand remains strong, it allows dealers to continue to hold prices at or above the manufacturer’s suggested retail price. Consumers have paid more than sticker for each of the last eight months, whereas one year ago, non-luxury vehicles were selling for more than $1,600 under.

http://www.insideradio.com/free/car-sellers-urged-to-keep-advertising-dealers-need-to-stay-engaged-say-experts/article_f2948000-8a48-11ec-9965-5365861b4c6d.html