As chip shortages drag on, many dealers are holding out hope that relief is on the horizon. However, the latest forecasts highlight why dealers experiencing inventory shortages can’t afford to pause their sales and marketing efforts until the market stabilizes.
According to a recent report from IHS Markit, inventory constraints are forecasted to extend through at least Q3 2022, while microchip producers have cautioned shortages may extend through 2022. But despite the forecasted challenges ahead, plenty of opportunity remains for proactive dealers.
To navigate uncertainties and challenges related to production delays, inventory shortages and other various external factors, it’s critical dealership leaders take a data-driven approach to navigating their next steps in seeking vehicle inventory solutions.
In this blog post, we share 4 ways for dealers to stay ahead of 2022 inventory challenges, including:
Proactively Engage Pre-order Prospects
As production delays drag on, customers shopping around in your market are likely hearing all kinds of wait times from various manufacturers and dealers, emphasizing the importance of engaging buyers early in their buying journey with transparent messaging.
While delivery time has always been dependent on brand, make and model, constantly evolving challenges to the supply chain have further complicated OEM production schedules. For dealers experiencing ongoing inventory shortages, pre-orders offer a natural opportunity to engage buyers returning to market while creating a simplified process for customers.
Instead of picking from limited inventory when it’s time to buy, potentially impacting dealership loyalty and CSI scores, pre-orders enable customers to get the vehicle they want, when they need it. But to stay ahead of evolving inventory delays, it’s important to engage prospects before they start shopping around.
Consider leveraging advanced marketing technology tools that integrate with data from your dealership’s CRM, DMS and service data to identify prospective buyers preparing to return to market in the coming months, such as customers approaching the end of their payment terms or the end of their warranty.
Focus on Customer Loyalty
As inventory shortages push prospective buyers to shop around, it’s important that automotive dealers recognize customer loyalty is no longer a given – even if a customer has bought from your dealership for years.
According to IHS Markit, brand loyalty among U.S. consumers for new vehicles dropped to a six-year low in June 2021 following steady declines in April and May. With these trends undoubtedly attributed at least in part to dealer inventory shortages, IHS Markit also found body style loyalty increased by 1.1% year-over-year in June.
What does this mean at the dealership level? If a customer wants to purchase an SUV, they will – even if that means switching brands to do so.
Just like with pre-selling, to protect your customer base from competitors’ conquest efforts and prevent customer defection, dealers need to engage loyalty customers before they return to market. Leveraging advanced dealership marketing tools that integrate with your dealership’s CRM, DMS and sales platform, look for cues that customers are preparing to return to market, such as customers approaching the end of their warranty or lease. Using this combination of market analysis techniques will help to drive sales.
When engaging these prospects, personalize your approach based on each customer’s unique wants and needs, avoiding “bait-and-switch” deals and including actionable offers that account for your dealership’s available inventory and any pre-order options.
Conquest New Opportunities
On the opposite end of the spectrum, as loyalty diminishes in some segments, new conquest opportunities are also emerging in others – especially surrounding all-new, incremental model launches.
While brands often use product launches to tout impressive claims about buyers converted from the competition, new research from IHS Markit finds that in the first six months of a new product being on the market, more than half of the model’s registrations come from same-brands owners, otherwise known as cannibalization.
IHS Markit also found the models contiguous to these new arrivals in either size, price, body style or any combo of these attributes usually suffer the greatest cannibalization. This poses an opportunity for dealers who have some limited inventory but are still looking for strategic ways to acquire used vehicles.
Maximize the Service Drive
When it comes to acquiring in-demand used vehicles, many dealers are also looking to the service drive, especially with an aging fleet and rising pre-owned values prompting some service customers to trade up.
To identify potential pre-owned acquisitions, utilize dealership marketing technology tools to mine your upcoming service appointments for potential trade and buy-back opportunities, like those with a higher-than-ideal interest rate on in-demand vehicle. Task your service-to-sales liaison or a well-connected BDC to proactively engage these customers ahead of their appointment to gauge their potential interest.
Mastermind data finds customers who serviced with a dealer are 2.5x more likely to purchase their subsequent vehicle from the same retailer. By proactively mapping prospective buyers to their available and incoming inventory, automotive dealers can further optimize their profitability – and drive customer loyalty.
But not every service customer will be ready to buy when they come in for maintenance. Here, using dealership marketing technology that integrates with your sales and service data to retain and nurture your service customers is critical.
Maintain contact with customers with conveniently timed service notifications, including personalized messaging that speaks to their evolving needs and in their preferred medium. Each of these communications should build on the last in a useful manner, meeting your loyal customers where they are in their ownership or buyer journey and keeping them engaged through the years.
Amid ongoing inventory challenges spurred by the chip shortage, little is certain about what 2022 will hold. Despite these uncertainties, forward-facing dealers are continuing to take a data-driven approach to stay ahead of challenges and secure future success.