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2018 is already posing challenges to a number of industries, while at the same time other businesses are beginning to boom. The auto industry is in the odd position of being both in a decline for the first time in a long time, and being poised on the brink of potentially extremely profitable change. Here are the top four automotive industry trends to watch, and react to, in 2018.
Just a couple 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.
The only possible defense is to focus on adaptability. There have been more disruptors to the auto industry in the last ten years than in the first 50 years after modern cars were invented, 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 – wherever it may go.
To that end, the rest of the automotive industry trends in this article are issues that dealers must adapt to, so if you are looking for ways to shape your dealership to benefit in the future, these are a great place to begin.
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, makes buying a car less and less justifiable. These demographics may be moving to the suburbs in a few years, but economic uncertainty and student debt are definitely delaying that. Dealers have to be able to weather at least a few years of sales drought – during which the automotive industry trends will absolutely be subject to tremendous change.
That doesn’t mean dealerships should ignore the ride-sharing automotive industry trend and hope that it ceases to disrupt car buying. 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 you 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, 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 its 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.
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. Dealers will benefit greatly by preparing to sell, service, and market electric vehicles and all that goes with them. Soon, they may be the only type of car on the lot.
That Age of the Consumer has been settling in for a while now, but 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 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. It’s time to realize this automotive industry trend is not going to go away. Dealers should revitalize their customer experience at all points in their business, from the service desk to their dealership website.
With these automotive industry trends to watch out for, dealers will be poised to make changes that will have a significant impact on their business. However, if they are ignored, dealerships may find their profits in decline.