Americans Are Driving Less; Should Dealers Worry More?
- The miles driven per American has declined by 10 percent since 2005.
- Dealerships have fewer natural opportunities to interact with consumers.
There’s a little discussed social trend that’s largely gone unnoticed and been masked somewhat by the surge in industry sales back to pre-recession levels.
A recent Transportation Department study noted that the number of miles driven per American peaked in 2005 and has declined by nearly 10 percent since then. That’s never happened before.
A comment in USA Today put it this way: “[previously], miles driven increased every year except 1932, during the Great Depression.”
According to the study, that drop is more the result of demographics than the recession or gas prices. As Baby Boomers age, they move from their prime driving years to retirement – when they log fewer miles. At the same time, generations entering their prime driving years have been putting off vehicle purchases – and that too has contributed.
It’s one of the hidden dimensions of the “New Normal” that the automotive industry has entered.
The impact of this social trend is not hard to recognize: With fewer miles being driven, dealerships have fewer natural opportunities to interact with consumers, especially around sales and service events.
Again, from the USA Today story: “If driving habits merely maintained 2005 levels, Americans would have driven 918 billion more miles than they actually did over the last eight years. That’s like driving to Mars and back 13,000 times.”
Across 918 billion miles not driven, how many service events didn’t occur? Vehicle trade-in opportunities that didn’t materialize? New vehicle sales not sold? Accessory sales that didn’t happen? F&I aftermarket products and vehicle financing? Dealership website searches that weren’t performed?
There are a number of implications for dealerships from this trend that come to mind.
First, with fewer miles being driven and less frequent natural sales and service events, most dealerships will need to “create” events and the marketing and advertising hooks that will reach and attract customers into the dealership.
Second, when consumers are in the market for sales or service, the pressure to reach and attract them effectively to your dealership will be magnified.
Third, when a customer does interact with the dealership, the dealership’s personnel will need to be virtually flawless in their execution and deliver an experience that will build customer loyalty. Flawless here means delivering a “frictionless” encounter for the customer. It’s an encounter that’s been engineered to reduce the customer’s effort – and friction – in achieving a sales or service objective or simply in obtaining information.
As with many social trends and the changes they bring, technology can be an important enabler for responding – and for actually making the most of the trend.
The dealers I speak with are rightly grappling with what this means for departments across the dealership:
- For the service drive and the type of experience my dealership delivers?
- For the dealership’s marketing and advertising and how we reach the right consumers at the right time with the right offer across the right channels?
- The way I answer the phone and the information available about the caller when I do answer?
- How I use my service drive more effectively as a resource for my pre-owned inventory?
- How I mine my customer database more successfully for future sales and service events?
- And the opportunities I have to tap into new profit areas in F&I, accessories, and service?
Even with all the implications of the Department of Transportation data and the dynamics of the “New Normal” in the industry, could there be a more exciting time to be in the automotive business?
For the dealers I talk to, that’s an easy answer: Of course not.
Automotive News recently published an article discussing why dealerships are sourcing lower-grade used vehicles to fill their lots.