Here’s How The Inventory Shortage is Affecting Dealerships
December 4, 2022
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The pandemic brought many consequences that impacted everything from how we work to how we shop, seek healthcare, and do business. If you’re employed in the automotive industry then you have undoubtedly noticed production slowdowns in recent years. There have been drastic changes in nearly every industry in recent years, from semiconductor shortages to low inventory levels, which have driven up prices, increased frustration, and disrupted the market. As a result, dealers are facing empty lots and decreased sales.

Even as the average automotive sales price climbs to more than a record-breaking $44,000, not even quick sales or high margins can compensate for the industry-wide decrease of 12% in new-vehicle sales. In the end, these challenges weigh heavily on both customers and dealers. While this slump isn’t expected to end until at least 2023, according to CarsDirect, the inventory shortage is simultaneously ushering in an era of more efficient processes and exceptional customer service.

In the world of digital online automobile retail, eager customers can meet dealers online, where it is fast and convenient to shop and more efficient for dealers to both sell and acquire new inventory. As the new and used inventory shortage continues, here are the most common scenarios you can expect (if you’re not already experiencing them) as an automotive dealer.

Cars are Exiting The Lot One-Third of The Time

From family-ready SUVs to EVs and beyond, cars that once sat on dealer lots for years are selling within weeks. While selling vehicles quickly and conveniently is excellent–especially without handing out discounts or incentives, selling out presents new challenges as dealers cannot restock accordingly. Today, because buyer behaviors and availability are inconsistent and unpredictable, it is additionally difficult to form reliable business and marketing plans.

Shoppers are Procrastinating

According to GM Authority, nearly 50% of those on the market for a new car are willing to postpone their buying journey until after the chip shortage ends. Otherwise, they’re ditching their new car dreams and opting instead to go the used route. To prepare and encourage these customers, dealers must gain an understanding of their preferences and shopping history, while crafting the perfect marketing campaign to ensure you are their first choice once they are ready to buy. To further cement your credibility, you should also consider implementing a simpler way to shop to increase the customers’ odds of conversion. For example, a digital auto retail solution can simplify and improve the buyer’s journey and optimize a dealer’s marketing campaigns.
Dealers Suspect Inventory Issues for Several Years

Despite it being nearly the end of 2022, some of the biggest shipping ports remain backed up, continuously experiencing delays in processing their incoming shipments. Toyota, for example, is facing a bounty of issues apart from the pandemic, including cyberattacks, earthquakes, and more. This inventory shortage is a double-edged sword because while it makes it difficult for dealers to source new inventory, it also makes it easier to sell what they have at higher prices. And sadly, customers are feeling this pain where it hurts–in their wallets. Since this shortage isn’t expected to end any time soon, dealers must consider alternate channels such as online retail.