3 Big Trends to Keep Your Eye On
- The future is as unpredictable as ever.
- To succeed, dealers need to be nimble and pivot quickly.
I often tell people, “our world will not be the same in two years as it is today.” And that is abundantly clear in our industry. In order to remain successful, you must be able to navigate never-ending change and know what has a direct impact on your business. At NADA, I had the pleasure of sitting down with Cliff Banks, founder of The Banks Report, to talk about three of the big trends affecting dealers.
The supply chain issues that began in 2020 seem like they’re here to stay. There has been a wide impact across the industry, from materials and inventory to gas and vehicle prices. One of the most potentially impactful issues for dealers in the short term is the timeline of the current pricing bubble, specifically for used vehicles. In our conversation, Cliff stated that an immediate concern many dealers have is properly timing the market so they are not sitting on large amounts of inventory when prices begin to drop.
The problem is nobody really knows when that will happen. We talked about the state of uncertainty we are living in and that anything can happen when you wake up the next day. In Cliff’s words, “Dealers need to be nimble and need to be able to pivot quickly. You have to be paying attention to what’s going on.”
Electric vehicles (EVs) are becoming a clear path forward in the auto industry, but it is going to be a while before they are the primary driver of sales. Cliff explained it well: “We’re still in the world of hype. The manufacturing capacity of EVs with Ford, GM, and others still isn’t there.” He went on to present that idea of the world being all electric within the year is unrealistic, especially with manufacturing shortages.
You are being asked to invest hundreds of thousands of dollars into your facilities to prepare for the EV wave, despite not knowing when you will need it. But this presents an opportunity to use these investments as an advantage to change your engagement model with customers, showing them you have plans in place for the future retail process.
The Future of the Franchise Model
Companies like Tesla and Carvana have taken a direct-to-consumer approach. And Tesla specifically has done a lot of leg work to challenge laws and regulations around new vehicle franchise legislation. In our conversation, Cliff talked about how the success of these companies in the next two to three years will have a significant impact on the franchise dealership model in the future and could potentially reshape how manufacturers distribute and market vehicles.
The connected vehicle also has the capability to impact how cars are sold due to the amount of data that skips over the dealer and straight to the manufacturer. Cliff talked about how “manufacturers are going to have much better access to customers than they’ve ever had before.” This means they will be able to dictate marketing and sales much more heavily.
It’s always great to talk with Cliff Banks, and he closed our conversation with this parting thought, “We have an opportunity to really shape what the future of the automotive industry looks like.” I couldn’t agree more.
Check out the full interview here. Plus, you can watch the other interviews we covered at NADA. We’d also love to hear what your dealership is doing to accommodate or prepare for these industry trends. Email me at Gregory_Uland@reyrey.com to share your thoughts or if you would like to be a guest on the Connected Podcast.