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The Economic Road to Recovery

Article Highlights:

  • How to use market trends after past dips as your guide.
  • Why you need to create a plan now for short-term and long-term recovery.

Notice: After this episode, we will be switching from releasing episodes daily to a weekly schedule occurring every Wednesday. If you would like to sign up to receive email notifications of new episodes, please visit reyrey.com/connected.

 

On this episode of Connected, we hear from Ryan Zwerneman, Sales Director for Naked Lime Marketing. He gives tips on how dealerships can look at patterns in the stock market to optimize their marketing strategies going forward.

 

Greg Uland: Hello, I’m Greg Uland, marketing director at Reynolds and Reynolds, and this is Connected, the podcast with best practices and ideas to help navigate what is happening in the automotive retail industry and the world today. As a COVID-19 virus continues to change our world and how we live and work daily, this podcast discusses ways to continue operating in this unprecedented social environment. On today’s episode, we have with us Ryan Zwerneman, sales director at Naked Lime Marketing. Ryan, thanks so much for hopping on.

 

Ryan Zwerneman: Thanks for having me, Greg. I really appreciate it.

 

GU Absolutely. I’m glad you could join. To dive into our conversation, I want to look towards a hopeful recovery here in the future and I’m interested to get your perspective on what that looks like. Is it a fast recovery? Is it slow? Are there too many unknowns to really tell right now? What do you think?

 

RZ: There’s certainly a lot of unknowns right now. I think we would all agree with that any prediction we make, it’s going to end up based on what’s happening or what does happen. But the one thing we can do is look back at history and we can see some very distinct patterns. One of those patterns is the auto industry has always followed the stock market very closely. When the stock market’s going up, vehicle sales are good. When the stock market’s going down, vehicle sales are down. It’s pretty important to note, though, that this is not necessarily the same for other economic indicators. The overall performance of the stock market has been the trend line that the auto industry has always trailed very closely.

 

GU: And why is that, do you think? What makes that correlation so tight?

 

RZ: You first have to look at what the stock market actually is. It’s predicting future valuations of companies. At its core, that’s what investors do. When the stock market’s going up, confidence in the relatively short-term future is high. That’s very similar to consumers predicting what they can afford in the future. That goes for lease, finance, and even cash deals. It’s Americans asking themselves, “how much risk am I willing to take for my future self?”  While in this situation where we’re hurting a lot and Americans are hurting in a lot of ways. But current stock market trends indicate there’s confidence that it’s going to be a fairly short-lived situation. The stock market fall was fast and hard. April’s seen a rebound, though. It’s been fairly volatile, but it has been steadily increasing.

 

GU: Yeah, it has. What does this look like then for dealers on the other side coming out and looking towards that rebound?

 

RZ: So again, we have to look at history. There’s going to be a large spike in the demand immediately coming out of this. The first month, you’ll likely see a big rebound. We saw it in 1991, 2001, and 2009. Then we’ll probably level back off and see a climb that’ll track pretty close to the stock market until we reach a sustainable level again. That could be 17 million vehicles and honestly, it could be more. One of the lasting effects of this could be a decrease in the use of public transportation and shared vehicles. Does that lead to increased personal vehicle ownership? Possibly. But going back to the spike as the economy opens back up, dealers need to take advantage of it in that month. Because how they perform then will set them up for success going forward.

 

GU: Yeah, it definitely will. Do you have any tips or advice on how to do that? How does a dealer tactically go out and make sure they’re set up for success?

 

RZ: First and foremost, we’re in a different kind of position here where that spike will probably be compounded by the fact that we’ve been told to stay at home. Things are definitely looking different in our layout in America. Every dealership and market is different. Demand certainly won’t be evenly distributed across the country, across states or even across towns, for that matter. It’s not going to be an even-playing field. Some dealers will just be in a better position due to geography. Knowing that, every dealer needs to carefully analyze their market and possibly redefine their market. And that’s in an effort to put themselves in a position to capitalize on a spike in demand. Many will need to pick new areas to advertise aggressively. Many may need to get better understanding of the possibility of shipping and delivery. And learn to do it in the most efficient and cost-effective way possible. It’s definitely a time to figure out what your market is and what the market needs are and then go supply.

 

GU: Very good points. Ryan, I definitely appreciate you taking some time to hop on and talk about this and hopefully it will be a speedy recovery. While we’re here and have the audience, is there anything else that you want to touch on or anything else you want to share?

 

RZ: I think the last thing to emphasize is I really encourage dealers to put a plan together now. Keep a very close pulse on when demand is returning. Once it goes, it’ll peak quickly and there won’t be time to react without missing a lot of opportunity. After that first spike could be a grind, so take advantage of the opportunity today and make sure you don’t miss out.

 

GU: Great. Well, Ryan, thank you again for hopping on, I really do appreciate it.

 

RZ: Thanks Greg, appreciate it.

 

GU: Absolutely. This has been Connected. Stay safe, and we’ll see you the next episode.

 

Continue to tune in often to see new episodes on best practices and tips for navigating the automotive industry during this unprecedented time.

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