In early 2020, no one could have imagined what the next two years would hold for the world- or the automobile industry. Through the shut downs of the early pandemic to vehicle shortages, a tightening economy and higher prices, to the in-dealership challenges of retention and growth, so much has taken place during this transitional time.
At DealerPeak, we acknowledge and have tracked these changes. Our research team used a first-touch attribution model to analyze data collected from hundreds of rooftops across the U.S. in Q1 2022. The data shows that there is a significant shift in how leads are generated in favor of third party digital retailers, along with an overall increase in online marketplace conversions. It is predicted that continued uncertainty will hover in the market for at least another year or more.
With this understanding, DealerPeak expects dealer groups to become even more reliant on third-party organizations for inbound lead support.
The Industry Continues to be Tested
Q1 of 2022 has shown that issues like dealership inventory, manufacturing stagnancy and inflated prices are continuing to affect conversions and the way in which consumers shop for vehicles. One of the largest obstacles for both manufacturers and dealer groups is the semiconductor chip shortage, a situation that is forecasted to plague the industry through 2024. Lacking inventory plus an impending potential recession means that retailers must get creative and stay optimistic.
Smaller brands with smaller market share are having an easier time keeping up with it all. Mazda and Maserati, for example, are able to achieve a much higher conversion rate compared to other manufacturers as they offer greater vehicle availability.
One Emerging Trend to Avoid
Dealers are looking to cut costs. It’s inevitable during a challenging time, however DealerPeak has identified a major trend to avoid. In Q1 2022, website provider conversion rates dropped across the board. This is attributed to the fact there has been less incentive for dealer groups to maintain their websites based on the current market conditions, coupled with less need to generate dealership foot traffic. We believe maintaining a strong website is vital for long-term success. The best performing website providers offer buyer-focused features such as chatbots, digital engagement, and embedded digital retailing tools.
What the Future Holds for Automotive
Resilience and adaptability are common themes among dealer leadership in 2022. Seeking opportunities wherever they arise is now essential to annual planning, and that may mean expanding partnerships with third party groups. As mentioned, third-party leads dominate as a primary lead source because these platforms have a large variety of vehicle inventory to share with buyers. Organizations and groups that can evolve from “me” to “we” will go far in this new chapter of automotive innovation.
There was also an increase in overall conversion rates for marketplaces like Autotrader compared to recent quarters. Online marketplaces allow consumers to shop and compare across all available inventory in the market - an asset in an economy where on-location dealership selection is low. This gives the buyer a sense of opportunity and control, keeping shopping frustrations to a minimum. Autotrader performs better than other marketplaces due to a large, high-converting database of vehicles. Thanks to high-ranking SEO and brand recognition, they attract abundant amounts of consumer traffic.
Support is Available Now
DealerPeak is an exclusive auto dealer CRM specializing in centralized data for multi-franchise dealer groups that provides real-time insights. It's our duty to help dealerships and vendor partners succeed - and this is more important than ever in times of uncertainty. We hope you found the information to be helpful in your late-quarter 2022 and early 2023 planning.
Please reach out with questions or to learn more about our CRM, Desking, Equity Awareness, or Open API programs.
This article was contributed by Zach Ferres, Board Chairman of Dealerpeak, in partnership with Laurie Halter, Dealer Marketing Magazine Expert Panelist and Owner of Charisma! Communications.
Laurie Halter is the Founder of Charisma! Communications, a successful automotive PR firm, and host of the Carearing podcast where she explores work/life balance issues for leading females. She has a passion for business and entrepreneurship, but what really gets her jumping out of bed in the morning is sharing her experience balancing life, work, and motherhood.
Join our newsletter and get news in your inbox every week! We hate spam too, so no worries about this.