Amid the most profitable time dealerships have ever seen, the US economy is uncertain at best. Economists are divided on whether this is a slowdown or the start of a recession. Auto retail has always been robust and flexible in the face of economic adversity, but the greatest successes happen when dealerships are ready to pivot.
lightico Co-Founder and CEO Zviki Ben-Ishay spoke with CBT News Online Editor Jason Unrau about the challenges facing the industry and vehicle retailers.
Jason: Where do you see the short and long term economic downturn? Is it headed for recession?
Zviki: The world’s top economics experts seem to think that’s the direction, but it’s unclear how long it will be. That’s why it’s important to prepare for the worst – and that’s a lesson you must have learned by this post-pandemic stage. Businesses of all types need to be aware that things can change quickly and you cannot assume that what worked yesterday will work tomorrow or the day after tomorrow.
Jason: The auto industry has withstood economic challenges time and time again. How will this downturn affect the industry?
Zviki: It’s important to realize that we are entering this economic downturn already in the midst of challenges for the automotive industry – chip shortages, supply chain issues, etc. Significantly higher prices over the past year due to these issues, combined with serious concerns about inflation, etc., could lead to a significant slowdown in car purchases. Financially, too, lenders will need to find ways to mitigate the increased risk of existing loans while still competing for new loans.
Jason: Dealers and OEMs are perhaps aware of the more obvious issues, such as lack of inventory and tight funding. What areas might they be missing or not giving enough credit?
These questions are really the key. Obviously, one side is tackling this problem head on – push for more inventory and create better partnerships with lenders to secure rates for your customers.
However, the less obvious tactics may involve ensuring that you are able to market and sell what you have in the way that customers want. For example, does your website present a complete and detailed inventory of available new and used vehicles that is user-friendly and attractive? Knowing that the dealer 15 minutes away definitely has the model I want while being unsure of the one 10 minutes away could easily sway who comes in.
The same goes for the M&I factor – can you make it smooth and easy? Can customers do this on their mobile device in their spare time? Or do they have to sit in the dealership for three hours only to have to come back to finalize things?
Jason: How does your choice of digital investment affect the economic situation?
Zviki: It’s really the same formula as in good times. Analyze your weakest points. Where are the routes interrupted? What takes the most time for your customers? When do you lose business because things are complex or take too long? It is absolutely essential to be fully aware of the most problematic aspects of the motor vehicle buying journey.
Then, when looking for technology that can help solve this problem, don’t just look at the return on investment. Equally, if not more important, is payback time, the time between deployment of the technology and a benefit to you and your customers. Solving a small aspect of the trip and getting a return on your investment may only take a few weeks or months. This means that the increased efficiency of this implementation can essentially pay for the next upgrade and the next.
Also, and I can’t stress this enough, don’t buy technology. Instead, “invest in a technology partner.” It is extremely important to find a technical partner who can help you not only to implement their solution, but also to continuously optimize it and be aware of additional needs.
Did you enjoy this article by Jason Unrau? Read more articles on CBT News here. Please share your thoughts, comments or questions regarding this topic by submitting a letter to the editor here, or contact us at firstname.lastname@example.org.
Be sure to follow us on Facebook and Twitter to stay up to date or catch up on all of our on-demand podcasts.
While you’re here, be sure to subscribe to our email newsletter for all the latest automotive industry news from CBT News.