By Cliff Green, CEO of Green Payments
Used car sales soared in 2020 and 2021 as supply chain issues and labor shortages decreased new car inventories. As car buyers stayed away from dealerships during the pandemic and sales of used cars increased, business boomed for online used car retailer Carvana. However, moving into 2023, things look vastly different for Carvana. The outlook for the company is deteriorating along with falling used car prices, rising interest rates and lower demand.
The outlook for car dealerships in 2023 has also changed. Supply chain issues and labor shortages are easing, improving inventory levels at dealerships. Research from Cox Automotive projects that “stronger production levels and softer demand will lead to higher days’ supply and, ultimately, more vehicle options for shoppers in 2023.” Cox Automotive also forecasts 3% year-over-year new-vehicle sales growth in 2023, with the market hitting 14.1 million units.
Even as these projections and forecasts herald some good news for auto dealers, to succeed in today’s ever-changing business environment requires a business agility that is powered by technology. More specifically, auto dealers will need to adopt technology designed to enhance the customer experience and streamline operations.
When it comes to enhancing customer experience, technology is vital to making the car-buying process as frictionless as possible.
A 2023 Capital One Car Buying Outlook report found that 67% of car buyers surveyed would like dealers to enhance their digital tools to allow for an easier overall car-buying experience. The report also revealed that dealers understand the importance of innovation with 93% saying it is importantto their dealership. According to this report, 33% of dealers believe innovation means implementing technology throughout the car-buying process.
Integrating technology into dealership operations is critical in the digital economy to meet increasing expectations around customer service. Consumers today expect a fast, easy and convenient car-buying experience. According to research from global consulting firm Boston Consulting Group (BCG), dealers are expanding their digital capabilities in response to this shift in consumer behavior with 92% reporting that they have improved at least one digital offering.
As customer service expectations continue to rise, dealerships will need to focus on deploying technology designed to reduce friction in the car-buying journey. One of the ways car dealers can do this is by leveraging technology that allows them to interact with customers across channels. This omnichannel customer experience provides a seamless buying experience for consumers both online and at the dealership.
Another critical part of reducing that friction lies in offering convenient payment options. Credit card processing and point of sale (POS) technology have evolved to help car dealers create a seamless payment experience for customers. Contactless payment options, such as Apple Pay, and electronic receipt signing are just some of the ways payment technology is helping dealers create better customer experiences.
Payment solutions developed specifically for auto dealerships are also driving efficiency in operations by allowing dealerships to customize the POS and reporting processes for each individual department in their dealership. This technology allows information such as RO number, stock number, employee ID number to be added to checkout screens and included on daily batch reports for easy tracking.
These are just some of the technologies that can help auto dealers become more agile, competitive and efficient to succeed in the digital economy.
As economic factors, consumer expectations and supply and demand continue to evolve, car dealers that integrate technology into their operations will be best positioned to navigate the headwinds and take advantage of the tailwinds of an ever-changing business environment.