Heading into a new year, it is safe to say that the automotive industry is on the precipice of change. Chip and vehicle production have been picking up over the last several months, giving hope to those in the auto industry, and experts predict that the chip shortage will largely disappear in 2023. After almost three years of unexpected inventory challenges and the resulting sales deficits, dealerships might finally have full lots again. December vehicle production was higher than expected, and some dealers may have even begun to see a slow but steady increase in inventory, a welcome sight after all this time.
While this is all good news, it is still likely to be a challenging year for the automotive industry. With a return in inventory, comes options, giving the customer more negotiation power and a return to a market of consumer choice.
Over the last few years, continuous interest rate increases and inflation contributed to a slowdown in customer spending and more downtime in the dealership. Those stores that have spent the unusual last few years in the industry as a time to train and develop their sales staff are already much better positioned to deal with the storm ahead. However, for those that have not, now is the time to begin! Here are some things to consider in 2023:
How to Work with Inventory Options…Again
Stores have not had many vehicle options in a while, and dealership staff have not had much to work with. Now that inventory is growing, sales managers need to have a strong grasp of the features and trim level options. This will allow for strong justification of need based on the customer’s desired features, and the ability to change trim levels for payment relief. F&I managers also need to familiarize themselves with these options so they can effectively justify products based on the features of the vehicle.
Address Rising Interest Rates
As interest rates continue to increase, sales professionals should have a strong grasp of the store’s Fair Credit Policy so they can properly communicate it to all customers. However, they should direct any questions to F&I — this is an excellent opportunity for F&I to get involved early.
How to Handle New OSF Specials
Alongside rising interest rates, banks and credit unions will also be targeting consumers with low rates and refinancing options. If a customer elects to use their own lender, an F&I manager must meet with the customer first. Sales and F&I managers need to study lender programs and communicate any “specials” to all management staff. Have a discussion with the customer to find the best solution for them to avoid refinancing chargebacks, focusing on products and how the products will benefit the customer in these uncertain times. Be specific in tying the benefits to the customer’s wants and needs.
Strengthen Your Leadership
When presented with unforeseen changes and challenges, it’s easy to deviate from a standard process, even for leadership (despite the fact that a good process should be set up to meet those challenges). To find success in a year with welcome changes and new accompanying challenges, take the time to redouble leadership efforts and brush up on good leadership practices: set attainable goals, implement effective accountability and one-on-one meetings with staff, manage the results, and stay positive.
The new year is certain to bring new challenges for the auto industry, but it is an industry that has overcome many historical challenges and emerged stronger than before. Having trained, effective sales and F&I personnel will be crucial for navigating the market ahead.