Experts predict that new vehicle sales will drop about 15% in 2020, which would mark one of the worst annual declines in the industry since at least 1980. In any typical year, this type of termination would be a major disaster. In 2020, however, there are more than a handful of industry executives thanking their lucky stars. It wasn’t any worse.
There is new hope that 2021 will lead to a recovery in sales activity based on new mindsets and digital marketing techniques that dealers have put in place to source the right inventory and target new customers.
The dark days of 2020
During the first wave of COVID-19 in March and April, new vehicle sales were wiped out as car factories closed and many car dealerships were unable to open their showrooms. During that time, JD Power predicted retail sales would decline by as much as 80% in April. Had that been the case, it could have kept up with near-recession sales for the year.
However, from May onwards, retailers opened up again and consumer demand recovered faster than expected. As a result, sales fell nearly 34% in the second quarter, and incentives like 0% and deferrals helped keep that percentage down.
Industry watchers expect final new vehicle sales of nearly 14.5 million for the year, compared to around 17 million in the past five years.
Inventory, not consumer demand, was causing problems
Inventories, rather than consumer demand, may have prevented that number from increasing for the year. Because of the inventory challenges for new vehicles, many consumers turned to used cars and trucks, which not only offered more supply, but were also offered at a lower price.
The problem started early in the pandemic when automakers closed factories and dealers stopped selling and trading vehicles – which drastically changed the natural flow of supply and demand. With less affordable new vehicles to buy, many consumers turned to used vehicles. And when fewer leasing turn-ins and trades took place, this forced a severe supply shortage and led to high auction prices.
Savvy traders are using technology, social marketing, and new thinking to bypass traditional auction houses and the more expensive inventory that comes with them.
New thinking through digital marketing
Today’s more advanced dealers activate creative new opportunities for sourcing used cars, such as: B. Facebook lead ads with the message “We’re buying your car” or “USD 1,500 through KBB for your trade”. According to PureCars, the leader in digital advertising, a dealer group of more than 30 rooftops ran such a campaign in August and generated more than twice as many leads as they were used to, resulting in a plethora of used car acquisitions.
Keyword search advertising on Google, Bing, or other search engines may not be considered “cutting edge” today, but it is still a tactic that many retailers do not think of first in their fixed operations advertising strategy. Failure to do so could cause dealers to lose low-hanging fruit to third party vehicle maintenance providers, especially during seasonal events like AC work in summer or tires and breaks in winter.
Additionally, today’s digital advertising technology allows for reorientation and ad serving before video content on popular websites like YouTube. The whole purpose is to capture more traffic for the landline business, not just because that’s good revenue, but these customers represent a prime target audience for potential sales and trade-ins once they’re in the waiting room.
These traders also use digital and search engine marketing techniques to purchase used inventory through fixed ops and equity mining as well.
This kind of innovative thinking has led merchants to make greater use of digital marketing to gain better control not only over their inventory, but also overall sales and customer satisfaction.
John Sternal is Director of Market Insights at Merit Mile Research, a division of the integrated communications company Merit Mile. He is an experienced PR expert with more than 25 years of experience in serving clients in various industries, both on the agency and corporate side, and has been writing about the automotive industry since 2005.
His creative approach to PR is one of the main reasons John has featured in newspapers across the country and in leading magazines such as the Wall Street Journal, USA Today, Forbes, Cigar Aficionado and Good Housekeeping, among others. He is also the author of a brand new e-book called PR Toolkit, a tool that small businesses can use to learn about the pros and cons of PR so they can successfully get their own press coverage.