The automotive industry has had a turbulent time lately. Navigating through a dramatically changing industry landscape and keeping up with changing consumer behaviours has been a challenge. To make things easier, we've pulled out some key highlights and trends from the last year to keep you moving into 2022.
Tighter purse strings
As the world reacts to yet another variant, the Covid pandemic continues to influence markets and decisions. It's reported that at least a third of UK adults have struggled financially since the pandemic began in 2020, making tighter purse strings a common theme for many.
With more uncertainty ahead, precautious spending is likely to continue into the new year. As drivers set their sights on affordability, used car dealers can expect the used car market to remain highly competitive.
The widespread acceptance of home working and hybrid models has dramatically cut commuting days. While the use of public transport has started to rise again, 51% of people say they minimise travel, compared to pre-covid. As a result, dealers may see reduced demand for cars for personal use but the potential upside is an increased demand for commercial vehicles to fulfil rises in deliveries and services to home.
Despite this, market analysis predicts that within the next 12 months, consumer intent to purchase will return to pre-covid levels.
The rise of car subscriptions
Lockdown prompted a global sustainability conversation and brought it to the forefront of the business agenda. The combination of rapid digital growth, changes in consumer personal and financial circumstances, and rising environmental consciousness has seen a spike in popularity for carpooling, ride-hailing and car subscriptions as greener transport alternatives.
Acquiring stock has been a major issue this past year for dealerships and 31% of dealers say that lack of availability is the biggest threat to business. The used car supply-and-demand issue in particular has seen a serious spike in prices, and it's predicted that, by Q1 of 2022 we'll see an acceleration of new cars into the market, leaving 59% of dealers feeling 'completely confident' about the next six months.
In uncertain times, it's important for dealers to remain adaptable. From pricing vehicles to careful consideration of what to stock their forecourt with, dealers must keep their ears to the ground.
The accelerated transition to digital purchasing has seen businesses quickly shifting their model to online. Customers are becoming more comfortable with buying cars online and now expect at least part of their car buying experience to happen digitally - whether that's with finance calculators to figure out monthly payments and talking to bots instead of customer reps, dealerships have the job of keeping up to speed with this shift in a virtual buying process.
Dealers will need to place digital at the forefront of their marketing strategies to deliver seamless customer experiences at every touch point in the customer journey from discovery to sale.
The Electric Revolution
With the growing popularity of electric cars, 2020 sales increased 40% year on year. By the end of the decade, it's predicted that over 30% of cars on the road will be electric.
As the need to be greener drives consumers' desire for more sustainable alternatives, the reduced environmental impact of electric cars gains more traction. As this trend continues to inspire drivers to make a change, used car dealerships must keep in touch with these behavioural changes and start to source and stock electric vehicles.
Things are changing rapidly, but the outlook is positive. Consumers are slowly coming back to buying cars, it's just that they're doing it differently now. While the world gets back on the road, whether by conventional means or new alternatives, dealers will do well to keep an eye on industry changes and stay agile enough to respond.
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