The year is new, but the challenges aren’t.
The auto industry continues to navigate supply constraints and the ongoing pandemic, as it did last year and the year before. Both events, however, have made dealerships better at selling online and into the pipeline of vehicles being produced. This year, we anticipate that dealerships will continue to refine their processes for both.
Here are other trends we think are coming for auto retail in 2023.
Digital retailing continues to evolve: As vehicle supply continues to recover, dealerships will have more inventory available. Having more vehicles on the ground gives consumers more choices, which could mean more competition. Dealerships will have to focus on what sets them apart in their market. That could mean highlighting an online sales tool, the ability to order a customized vehicle or an omnichannel sales process. Omnichannel refers to technology and processes aimed at providing a seamless buying experience for consumers whether they shop online, in-store or both. Survey after survey show consumers want a fast, seamless and convenient car-buying experience. Expect the process of transacting online to get smoother.
A focus on data security: The Federal Trade Commission pushed back by six months a deadline to comply with the revised Safeguards Rule — which outlines how financial institutions, including auto dealerships, must protect consumers' data. Yet compliance experts have urged dealerships not to delay in taking the steps necessary to meet the rule's requirements. As data breaches and ransomware attacks continue, tightening up security is not only a regulatory issue but a good business practice.
The economy's impact on the used-vehicle market: Franchised dealerships and publicly traded online used-vehicle retailers alike will be contending with deflated consumer confidence at the start of the year. If inflation and higher interest rates continue to spur consumers into putting off large purchases like vehicles, dealers and those companies stand to take losses. In 2023, scaling down growth plans in favor of stabilizing profit per vehicle sold is a priority for dealers and for online players Carvana Co., Vroom Inc. and Shift Technologies Inc.
Happy New Year, readers. What trends do you see on the horizon that we didn't include? Send us a note and let us know.
