Top 5 Challenges Auto Dealerships Face in 2021/2022

Learning from an unpredictable 2021 is the key to an unstoppable 2022.

Despite an ongoing labor shortage, unprecedented demand, and supply chain issues, 2022 presents tremendous opportunities for dealerships willing to invest in customer experience.

We surveyed 213 auto businesses and over 1,300 consumers to understand what you can expect from your customers in the coming months and years, how to increase your operational efficiency, and how to retain your employees in the midst of a turbulent marketplace.

Selling a car isn’t what it used to be.

2020 was unprecedented. And 2021 has been full of even more new challenges. Auto dealerships today face a unique situation—demand is at an all-time high, but that hasn’t necessarily made it easier to sell cars.

Dealers now have to be more creative to keep revenue stable. According to the Times, automotive production lost globally is at 6.58 million units through the third quarter in 2021. Where many new dealerships had been used to 200 cars on their lots, many have been reduced to merely 5 or 6. This means dealerships have had to adapt and learn to sell cars that don’t yet exist. Without pictures or test drives. And the customer may not see their new car for 60+ days.

In a seller’s market, there is no longer room for price negotiation. The average car today sells for $4,000 more than just 2 years prior, and in some cases, customers are paying $10k – $12k above MSRPto get the car they want. Salespeople have evolved into order takers—and these trends likely won’t see an end in 2022.

On top of it all, the nationwide labor shortage and COVID restrictions have made it difficult to hire and maintain staff, which means that, despite increased demand, most dealerships are not operating a full staff and their employees are even more overworked and burnt out than normal.

The biggest challenges auto dealerships faced in 2021.

In this new market environment, it’s no surprise that dealers cited the following as their top business challenges:

Despite these challenges, 88% of dealerships feel optimistic about 2022.

What are dealerships focused on?

1. Increasing efficiency

Since the pandemic, many dealerships have had to shift their focus to managing increased demand with fewer or the same staff numbers. They’re also focused on improving employee efficiency and saving time.

72% of dealerships have invested in technology to help their employees be more efficient in the past 12 months.

2. Improving the customer experience

With dramatic shifts in how cars are sold, communication has become the primary aspect of the customer experience. Dealerships are seeing an increased need to keep customers in the know in terms of:

1. Pricing
2. Options
3. Inventory
4. Order Status

In light of this, dealerships are focused on improving their digital presence and virtual buying experiences. One-third of dealerships have invested more digitally since the pandemic.

Two strategies dealerships can implement today.

1. Manage demand

The first six months of 2021 showed record-breaking demand. This can be a silver lining, but only if you manage it well. How do you do this?

• Improve coverage of inbound leads. With the right tools, your team can manage more text message conversations at a time than phone calls or emails. Managed chat/conversations services can help you make sure no leads fall through the cracks.
• Manage all inbound messages across channels in a single organized inbox. Have your managed chat service and/or BDC organize your inbox with a current customer inbox, a hot leads inbox, a service inbox, etc. By organizing, your team can prioritize and get leads to the right person quickly.
• Convert website chats to text messages. You can even implement conversational auto-responders to FAQs (message templates) to make replying faster.
• Implement video chat. Use video to show customers what you do/don’t have on the lot and help them feel like they’re there with you.

2. Increase customer communication

As more people prefer to complete more of the auto buying process online, dealerships must meet customers where they’re at. To have a good experience, customers need frequent updates about the status of their purchase as well as substantial contact during and immediately after the buying process. How can you offer this at scale?

• Text. 65.6% of consumers think texting makes working with a local business more convenient. And consumers are twice as likely (1.8x) to prefer texting to any other communication method. In 2021, dealerships report that foot traffic has been lower, with an increase in digital inquiries (emails, form submissions) and texts.
• Offer an omnichannel approach. Customers need to feel like they’re on the lot with your employees as they make their key decisions. Consider offering video messaging options in addition to text.
• Create messaging/communication workflows. For customers that place orders for new cars, map out the communications needed along the way and create templates for your sales staff:
  • Order confirmation text, with info about estimated timing
  • Down payment link text
  • Information needed to complete sale text (send a secure message)
  • Your car is being built text
  • Your car is being shipped text
  • Your car is ready text – please pick it up at your earliest convenience
  • Review request text – how did we do?

How Burt Watson Chevrolet uses Podium to deliver a stellar customer experience

In face of overwhelming demand, Burt Watson Chevrolet needed a way to make their employees’ lift lighter and manage leads effectively. They found their answer in using a platform that helps manage conversations.

“Our customers feel more appreciated because we respond to them faster and we haven’t missed as many leads. It’s built up the overall integrity of our dealership. Customers feel a lot more invested in us, in large part because of the quality of the conversations they’re having. It’s very personalized because it is real people that are interacting with our customers.

Now our sales staff is able to focus on helping the customers that are walk-ins or ones that have set appointments through the conversations that our platform has provided for us—it takes a lot off their plate. They’re not scurrying around and doing multiple things at once. They are a lot more relaxed and they can attend to the client to a lot better. Not only that, but because it’s all recorded into our CRM they’re able to go through and look at the conversation histories and see all the fine points that were discussed within the conversation, so it’s as if they were talking to the customers directly themselves.”

– Marktavius Nichols,
Marketing & Creative Director

The dealerships who are setting up for success have figured it out. To see success in 2022, dealerships have to focus on achieving big-name convenience while leaning into what makes them local. This means that they have to digitally invest and increase efficiency to prioritize their people—both their customers and their employees. Doing so will lead to quick rewards. But more importantly, it will set them up for consistent stability, growth, and opportunity in the future.

You can get started with Podium for free today.