As the economy works to return to a semblance of normalcy, strategic planners will be expected to better target vehicle content to meet specific consumer demands more efficiently. This will be critical to addressing consumer affordability and industry profitability in the new normal.
To maintain sales volumes, the industry has traditionally created hundreds of combinations of features and functions to connect with potential buyers. There can be 1,500 configurations associated with any given make and model on the lots of dealerships across the country. But even with this variety, the chances of consumers finding their unicorn — a vehicle that has the specific combination of content desired — are going to be pretty small.
The current approach is somewhat at odds with what J.D. Power has learned about consumer preferences. While it is true that buyers across the spectrum of mass-market and luxury vehicles demand a robust array of advanced standard features, the laws of diminishing marginal returns appear to quickly manifest as more content is added.
Buyers now expect vehicles to come with keyless remote entry and Bluetooth hookups for phones. A lot of vehicles now have Apple CarPlay or Android Auto so consumers can effectively have navigation in their vehicles. Power windows, power mirrors, air conditioning and backup cameras are also expected. However, once these basic thresholds of content are met, everything else is a cherry on top.
This reality is not stopping automakers from believing that consumers need more choices. It is a mindset that has contributed significantly to the rising cost of new vehicles over the past decade. And it is elevating costs for dealerships that are paying floorplan interest.