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Good Service Will Help Soothe Automotive Retailer Challenges

October 13, 2022

Where did all the cars go?” 

Empty dealerships, year-long delivery times, skyrocketing prices, this is what it’s like for consumers looking to buy a new vehicle. If a car wasn’t so essential for getting to work, or the kids to school, people would give up trying. And many have. Even with the great “return to the office”, 53% of Americans are delaying large purchases, like new vehicles, citing concerns over increasing inflation, high gas prices, and a looming recession. So, how can automotive retailers overcome these challenges, and retain consumer loyalty and interest in a time when customer frustration is at an all-time high? That’s when customer experience (CX) becomes vitally important because service always trumps price. 

The Good News: Service is Still the BIG Differentiator 

Now, here’s some good news. Nearly 80% of customers will forgive occasional issues, even one or two bad experiences, if they believe that, overall, customer service is “very good”; and 54% would rather buy from dealerships who provide better experiences than lower prices. Given that new vehicles are, on average, costing up to $6,000 more than they were three years ago, that is good news! 

This means that car dealers, whether online, or in-store, have a chance to overcome even the seemingly insurmountable challenges caused by the pandemic and recent global events. You may not be able to control the rate at which new cars roll onto the lot, or the barrel price of gas, but one thing you can control is how your customers experience your brand and how you do business. And the most telling is when circumstances favor the supplier side of the equation.  

While our instinct may tell us to take advantage of the high demand and limited supply that is leading to record profits, eventually manufacturing will catch up, and the tables will tip once again in consumers’ favor as supply returns to pre-pandemic levels. Buyers will be able to be more discerning in their choices. What consumers will remember now, and in future years, is the service they received. If automotive retailers wish to come out on top, they will need to focus on giving the best customer experience. 

The Bad News: Car Customers Are Really Frustrated 

It’s going to be an uphill battle to keep consumer goodwill, particularly when customer surveys already show that people see most dealers as only “somewhat trustworthy”. This perception has only been worsened as customers are often forced to pay well above the manufacturer's suggested retail price (MSRP) - an average of $47,000 USD for a new vehicle versus $38,948 USD 3 years ago. The used car market is no better. With inventory shortages of new cars, the demand has shifted to used vehicles, with average selling prices matching that of new ones. 

Because of this, car purchases are being delayed. The U.S. Vehicle Purchase Intent (VPI) Index, that looks at the percentage of people who intend to buy a vehicle in the next six months, has trended downward throughout 2022. Surveys show that 56% of consumers see this as the wrong time to buy, the highest rate since 2017, which experts directly tie to the growing concerns over cost and inflation.  

Semiconductor shortages have strangled supply. With a production loss of 1.5 million units in 2021 and now 2.6 million units in 2022, people are being told they must wait anywhere from 1-4 years for new vehicles, especially electric vehicles (EVs), and SUVs. A recent study showed that 26% of U.S. adults have experienced inventory shortages in the last year. 

With EVs too costly or unavailable, and soaring gas prices close to US$5 per gallon, people are now reconsidering other, more cost-effective alternatives to buying their own car, such as ride sharing or using public transportation.  

Even when customers are forced to buy, they are frustrated with the buying process, especially Gen Z buyers who favor speed and convenience, and can’t be bothered with long waits at the dealership or online.  

Retain Consumer Loyalty with Improved CX 

For automotive retailers, the answer isn’t simple, or easy, but it is straightforward. You can’t do much about the global disruptions facing auto makers, so now is the time to rely on your customer experience.  

However, it isn’t just a matter of being pleasant or accessible to customers; 63% of those surveyed said they find some part of the car-buying process confusing, and they need sales staff who can offer empathy, knowledge, and transparency in sales. They need help understanding one of the most confusing aspects of car buying, whether to lease or finance, which isn’t so clear-cut with rising interest rates.  

People also need proactive customer service, and options, if the car model they want is unavailable. They need increased communication about wait times and any price fluctuations while they wait. Dealers may have to go above and beyond to find someone’s preferred model, even if that means calling around to contacts in neighboring dealerships, to see if they have available inventory.  

The customer journey also needs to evolve with consumer preferences. Before the pandemic, only 32% of U.S. buyers were open to buying online. That number has now jumped to 61%. Convenience is now king. Customers want to be able to peruse product info online, then complete their transaction at the dealership. Those that can offer a hybrid combination of in-store and virtual experiences can streamline and speed up the sales process. This in turn will make customers happier and more likely to remain loyal to your brand. 

Competing with Online Automotive Retailers 

Online retailers are increasing their market share, with over 100% yearly revenue growth, because they make the car buying experience easy. Tesla delivered more than 300,000 vehicles to U.S. buyers in 2021 using almost an entirely autonomous shopping experience, without the wait times and hidden fees plaguing the dealership experience. Many online retailers offer value-add services, such as home delivery, and even at-home trade-in evaluations, as well as virtual tools that allow customers to apply for credit online – shaving almost 30 minutes off the financing process.  

To compete with online offerings, dealerships need to rev up their CX efforts by creating more immersive online experiences, digitizing some of their processes, and by adding support and sales channels such as text, chat, and emails, so that consumers can find a variety of paths to purchase. Chatbots can also help you move people faster down the sales funnel by pointing customers to helpful FAQs or product pages, or by booking in-store appointments virtually.  

As you consider transitioning to a more omnichannel customer experience, the right partner can provide you with the technology, talent, and strategy to help you effectively manage, scale, and develop your CX. itel offers all the support channels you require, in multiple languages, and access to our Innovation Lab, where we help clients meet the challenges of today and tomorrow. 

Reach out to our team to learn how we can help!

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