Issues Car Dealerships Face

The entire automotive industry is undergoing major shifts, along with the auto financing landscape. Combined, these changes impact car dealerships across the United States. Here are the top five issues car dealers must navigate today. 

1. The Switch to Electric Vehicles

As the automotive industry switches to reliable, assisted-driving electric vehicles (EVs), more and more consumers buy their cars directly from manufacturers. While EVs entered the market at an extremely high price point, these vehicles are quickly becoming more affordable and are likely to make the majority of car sales by 2030.

Dealerships face the challenge of low demand for non-electric vehicles and a possible bottleneck in the market if electric vehicle supply can't keep up with the rising demand.

2. Supply Chain Issues

Supply chain problems can hobble the entire automotive industry, as we've seen with chip shortages that started in 2020. When there's a disruption in supply, production suffers and prices rise, which impacts manufacturers, dealerships, and buyers. Dealerships may have smaller inventory while they wait for the supply chain to stabilize, and buyers may face higher sticker prices.

One of the ongoing car dealership challenges is meeting the growing demand for used vehicles. With rising costs of living, many people prefer used cars in good condition over new cars, while the used vehicle supply is dwindling. Rising demand and narrowing supply mean higher prices, so it's getting harder for car dealerships to offer lucrative deals on used cars.

3. Rising Competition Online

Customers looking for a vehicle used to go to the local dealership without thinking twice. Today, with online dealerships, virtual showrooms, and direct sales, your dealership is facing a lot more competition. 

To thrive in the digital market, your dealership needs a solid online platform and a powerful digital marketing strategy. And, of course, you must provide outstanding customer service and attractive financing options to keep your client base.

You may see this as both a challenge and an opportunity. You can use digital platforms to offer more convenient, personalized, flexible, and customer-centric services that will place you a step ahead of your competitors. 

4. Inefficient Processes

Many dealerships invest in brand-new showrooms and advanced technology, but let their work processes lag behind with outdated software and inefficient data storage. 

Automating and streamlining your processes will help you cut down on work hours, save money, and avoid frustrating errors. Look into your service department processes, like communications, reporting, and information storage. Check your workflow for bottlenecks and consider what you can do to become more efficient, like upgrading your customer relationship management software or consolidating all your data into one easy-to-use platform. 

5. Shifting Sales Strategies 

It seems that aggressive selling is declining in car dealerships. Today, customers prefer a more consultative approach that prioritizes consumer experience over making a sale. You want your clients to feel that you are there to meet their needs, not your revenue goals.

 

You can make your dealership more attractive to customers by switching from high-pressure selling to a personalized, client-centric process, emphasizing communication and trust. You can also expand the range of services you offer, for example, add repair and automotive part replacement. Aim to become the trusted one-stop shop for your clients' entire vehicle needs.

Edge Financial Services: Reliable Financing for Auto Dealerships

At Edge Financial Services, we provide reliable financing for car dealers at competitive interest rates to help you overcome car dealership challenges. Our team will find the right financing program for your clients, even those with poor credit history. Contact us,  (866) 890-2415, today for affordable auto financing offers.