Global disruptions pose many challenges, but dealerships have to continue to adapt
Two years into a pandemic that continues to surprise and disrupt the world, the auto industry, like so many others, is grappling with a host of complex challenges that have led to many creative solutions.
The global supply chain has been significantly disrupted, and our industry has certainly felt the crunch of several stressors—from the continued microchip shortage to shipping and logistical obstacles.
The impact that these disruptions have had on the auto industry is clear, with global light vehicle production forecasts down 9.3 per cent to 82.6 million units in 2022, according to IHS Markit.
As an industry, we can and must learn from these supply chain issues. Suppliers and manufacturers, for example, need to acknowledge that with deep global economic interdependence, more serious disaster planning must become the standard.
Whether it’s a pandemic or an extreme weather event, the supply chain can be strengthened by taking these potential disruptions into account to streamline risk mitigation. Another key learning is the critical need for a more distributed manufacturing strategy to ensure a more diversified supply chain, thereby preparing better for vulnerabilities.
Car dealers across BC and North America also faced an inescapable shortage of inventory, which in many ways may signal the beginning of the end for the tried and trusted just-in-time vehicle manufacturing approach.
While this model enables the industry to adjust to fluctuating markets, the pandemic has highlighted how the benefits it produces may not be worth the trade-off if it results in a lack of preparation for future disruptions.
We are already seeing major vehicle manufacturers make moves toward gaining more control of their supply chain by moving the responsibility for core components from vendors to within their own organizations.
In tandem with the limited supply, IHS Markit reports that more than 50 per cent of OEMs and dealerships expect an increase in new car sales for private use—creating a tight market for all.
So how can car dealers adapt to this climate? One strategy to mitigate this is for dealers to list their inventory before it arrives—this not only educates customers on what’s available, it can also provide an opportunity to build anticipation. The caveat is that dealers must ensure that their inventory listings online are constantly updated.
Robust and updated online inventory listings are just one way that car dealers have adapted to the multitude of challenges that they’ve faced over the past few years and comes as part and parcel of the increased digitization of the retail experience.
Online purchases are the future and dealers must continue to evolve their online presence so as to offer the best possible experience to their customers, with the ultimate goal of offering an end-to-end solution in an entirely digital manner.
Moving the final steps of the purchase process online, such as finalizing price, selecting F&I products and remote signatures, is pivotal for the success of dealers moving forward.
The increased digitization is itself a subset of a greater trend among car dealers, catalyzed by the pandemic, namely, improving the overall car buying experience. From ensuring a touchless customer experience, to investing in virtual showrooms, virtual test drives and more, all of which helps drive consumers to your (virtual) doors.
Essentially, these retail and business strategies act as differentiators between dealers, positioning those who embrace the brave new future of automotive retail ahead of the rest.
