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One of our first posts of 2018 was all about the trends that would define the automotive industry in 2018. As 2018 comes to a close, we’ve researched and reflected upon how these trends have truly changed the automotive industry landscape.
Here are the top automotive industry trends that dominated and differentiated 2018:
Just a couple of years ago, automotive industry trends for sales looked to top 20 million annually by 2018. Instead, they are projected to come in for 2017 somewhere around 17.1 million vehicles, half a million less than last year, and almost certain to get worse. Sales in 2018 are predicted to drop further yet, with AutoTrader and KBB predicting 16.6 million vehicles sold. These downward automotive industry trends are the first since the Great Recession, and dealers must be prepared to weather this period of low sales.
2018 hasn’t been the crash some dealers feared, but the downward trend does continue.
Dire forecasts at the beginning of the year predicted a drop to 16.6 million vehicles sold, but, despite the second half of 2018 not being as productive as the first, that forecast has been edged up to 16.8 million.
We’re not saying anything shocking here. Dealers have felt the slowdown, with many reporting that traffic to the lot is noticeably down. The slowdown has many factors, from natural economic struggles during times of technology change, fuel prices, trade agreements, job availability (which is strong), and wage growth (which is poor).
It’s likely we aren’t out of the sales slowdown. Look for this trend to continue into 2020.
Let’s be real, the only possible defense to a sales slowdown is adaptability.
Think in terms of evolution. When food dwindles or habitat shrinks, the creatures that adapt, that change to fit the new situation, are the ones that survive.
The same thing is happening today. There have been more disruptors to the auto industry in the last ten years than in the first 50 years of its existence, and that rate of change is not expected to lessen – in fact, change will only happen faster. That means dealers need to be flexible and bend to the motion of the industry. Hint: that’s rapidly shifting online.
One of the major automotive industry trends this year is the death of the taxi. Uber officially has more drivers in New York than there are taxis, and nationwide Uber and Lyft have more market share than taxi cabs. The age of the taxi is over, and it is unlikely ever come back, regardless of the numerous lawsuits filed by taxi companies seeking to limit the growth of ride-sharing.
So sure, automotive industry trends show ride-sharing services like Uber and Lyft have been decimating the taxi industry, but they haven’t really been seen as major issues for auto dealers yet.
After all, ride-sharing competes directly with taxis, not so much with people owning their own cars. But the key to the massive ride-sharing growth we are seeing is the rising expense of urban areas. Owning a car in a metropolitan city has always been difficult and expensive, but the growing expense of living in the city, particularly for young professionals who have yet to really settle down, makes buying a car less and less justifiable.
Like we predicted above, ride-sharing didn’t cause an automotive industry apocalypse in 2018, but that doesn’t mean it has slowed down. Ride-sharing is growing.
In 2018, ride-sharing user penetration hit 17.8%, and it’s expected to hit 23.1% by 2022. That’s nearly a quarter of the population. Naturally, much of that growth will happen in cities and large towns, but that doesn’t mean it’s a trend to ignore. Even if ride-sharing isn’t huge in your town, the sheer fact of its growth shows the user preference for convenience in all things, particularly transportation.
The advice we gave earlier this year still stands. If you are in an area where ride-sharing seems like a viable threat to vehicle sales (looking at you, metropolitan dealers), then developing relationships
This is the perfect time to offer incentives and connections with Uber and Lyft drivers – creating longtime customers whose vehicles will need constant maintenance and who might want to upgrade to a higher quality vehicle for better fares at some point. Just because they might be profiting off people who might otherwise buy a car from your doesn’t mean you can’t profit from them.
Dealers need to be prepared for the automotive industry trend towards the rapid growth of electric vehicles. In a year when auto sales declined for the first time in years, electric vehicle sales grew 30%. Though electric vehicle sales barely topped 1% of all auto sales in 2017, that number is sure to grow rapidly – probably eventually to consume almost the entire market.
Almost all automakers are kickstarting major electric vehicle initiative in response to this automotive industry trend. Mercedes-Benz will offer 50 electric versions of all it’s models by 2022. BMW will mass-produce electric cars by 2020 and make 12 different models by 2025. GM will add 20 new electric/fuel-cell vehicles to it’s products by 2023. Ford pledges to form a team to accelerate global electric vehicle development. Volkswagen will spend $82 billion on a multifaceted initiative to develop electric vehicles, mobility services, and autonomous driving by 2022. Toyota is spending $13 billion to introduce 10 (or possibly more) electric vehicles in the early 2020’s.
The electric vehicle wave has in no way slowed down. In fact, it’s only getting stronger. This is a trend that will not be going away. This is not a fad. These are the cars that will come to dominate our roadways within the next decade.
This year, EV sales in the US are expected to have grown 50% compared to last year – hardly the case for any other vehicle type. In fact, the first half of the year in California (without a doubt the leading state in EV sales), hybrids and EV sales made up more than 10% of total vehicle sales.
Sure, California is an early adopter – but that’s how technology shifts. The early adopters grab hold, and before you know it, even the luddites are being converted. Very soon, the next phase is going to hit, and there will be no getting away from EVs. In fact, it’s predicted that electric vehicles will grow from 3 million to 125 million by 2030. Whole nations are determined to eliminate fuel-burning vehicles as the automotive industry trends toward green vehicles, with Britain and France set to ban gas-powered cars by 2040.
The reason EVs have yet to truly dominate comes down to a few factors, but the major reason is lack of availability. There just aren’t that many options yet for EVs, and certainly not many models to choose from. As high-demand vehicles begin to enter the market
There’s really nothing to do but get on board. Or at least, thoroughly prepare to get on board. After all, your OEM might have limited EV options right now, and the demand is still yet to explode. Regardless of political trends however, the industry has already recognized that fossil-fuels are going the way of the dinosaur… again.
So how do you prepare? First, learn about EVs. We frequently hear that when it comes to selling EVs, salespeople struggle to explain and market the technical details. Similarly, make sure your dealership is prepared for the unique needs of EVs and their drivers. Prepare to sell, service, and market electric vehicles and all that goes with them. Soon these may be the only type of car on the lot.
That Age of the Consumer has been settling in for a while now, but in 2018, it is finally fully here. Google, Amazon, and Tesla, the customer-experience royalty, are setting records every year. Customers are flocking to convenience and control wherever the option arises.
We also can’t ignore that one of Tesla’s major appeals is their recognition of this auto industry trend and their decision to allow consumers to buy a car without having to experience a dealership.
This has been an automotive industry trend for years, but it is only growing more essential. Customers have been crying out for a better dealership experience. In fact, 87% of Americans dislike something about car shopping at dealerships and 61% feel they’re taken advantage of while there. The fact that customers still feel like this means that dealers are not living up to the expectations of customer experience that the average consumer has these days.
72% of consumers would visit dealerships more often if the buying process was improved, meaning that by neglecting to shift their businesses toward customer experience, dealers are missing out on potential business from up to 72% of consumers.
2018 has been a tumultuous year with lots of ups and downs across the map, but customer expectations are higher than ever.
There’s been an emerging demand for highly-relevant, unique online experiences. In fact, not offering a personal experience is now a bad thing. An enormous 71% of consumers say they find impersonal experiences frustrating.
In addition to that, the mobile experience is also becoming more and more important. In 2018, mobile proliferation has reached the point where smartphones are now the standard shopping tool.
Apart from this we’ve also seen more dealers embracing and incorporating customer experience. We’ve been marching to the beat of customer centricity for years, and it’s very gratifying to see the industry beginning to recognize and respond to this trend.
Perhaps more than any trend on this list, customer experience has been changing the automotive industry, and will continue to do so beyond 2018.
There are many ways to adjust for higher customer expectations, but focusing on what shoppers most want is always a good bet. Let’s look to the expectations we saw major increases in:
Relevance. Users crying out for a more relevant online experience will be delighted by machine learning technology. Our own Behavior-Based Targeting (BBT) does this by adapting site-wide content
The mobile boom also needs to be addressed. Take a mobile-first approach [LINK TO WEBINAR] to your dealership website, and incorporate AMP in your dealership online marketing strategy. You can do this super-easily with our exclusive Rocket Pages.
The automotive industry is in the midst of disruption, and while these trends do pose a threat to some dealerships that lag behind, there’s more opportunity for those ready to seize the moment.
You’ve read the trends. You’ve seen them in action. You have the best solutions for facing each challenge posed. If you’ve got the drive, your dealership has all it needs to put you in the lead.
Looking for more inspiration? Check out 5 Dealership Customer Experience Champions and Lessons For Success.