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Economy Industry Trends

2023 – Firing On All Cylinders

2023 will require dealer principals and their teams to fire on all cylinders to successfully weather the numerous challenges on the horizon. Economic uncertainty, evolving dealership sales models, fluctuating profitability targets, persistent staffing challenges, and continued growth in electric vehicles (EVs) are just a few of the issues which will impact retail automotive dealers.

There is plenty room for optimism for those dealers who put strategic plans in place, implement focused training protocols, bolster pricing models and fixed operations, and keep an eye on compliance. Let’s break down some of the opportunities for dealers to succeed in 2023.

EVs, sales models and customer connections

Growth in EVs and the hybrid instore and online sales model has highlighted the issue of strengthening and maintaining customer connections at the dealership. As more EV manufacturers sell direct to consumers, and consumers become increasingly comfortable buying a vehicle online, dealerships face challenges communicating with customers before, during and after the sale. Dealers who invest in implementing targeted sales processes and training will exit 2023 with more profitable businesses, greater employee retention, and stronger customer relationships.

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Recruiting

End the Year on a Hiring High

According to the most recent jobs report from the Bureau of Labor Statistics (BLS), the United States job market continued to grow steadily, with 261,000 jobs added in October 2022. This shows a slight decrease in the jobs added compared to the previous month, while the unemployment rate increased to 3.7 percent. Conversely, many high-tech companies have signaled – or already implemented – layoffs or hiring freezes. Could this mean a larger pool of potential recruits for dealers to scoop up?

With continued signs of strength in retail automotive and strong revenue potential, dealerships have some strong selling points to attract the best candidates. But don’t rush to hire the first available candidate. Successful hiring at the end of the year should be strategic. Hiring the right candidate is very different today. Let’s look at some of the challenges and opportunities dealers face when hiring.

Hiring Five Generations Deep

For the first time in modern history, there are currently five generations active in the workforce. Each generation brings a unique perspective to their job, providing an employer with a rich, cultural microcosm that can relate to every type of customer. Although the pandemic accelerated changes to the traditional workplace, many of today’s workers have reassessed their relationships with work, placing a priority on work/life balance as well as company culture. Making those diverse perspectives work effectively can be challenging for any employer.

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Industry Trends

Finding Value In The Electrified Infrastructure

According to analyst firm BloombergNEF,  just over half of the passenger cars sold in the US will be electric vehicles by 2030. This growth is spurred by actions taken by the White House and Congress through the newly enacted infrastructure law. Legislative steps in California to adopt clean air standards will likely be supported by several additional states within the next five years. And finally, every major automotive manufacturer in the US have announced plans to accelerate production of battery electric vehicles (BEV), with many planning to eliminate the sale of internal combustion engine vehicles by 2050.

Clearly, BEVs are coming and more quickly than anticipated. Many dealers already have a smattering of these vehicles on their lots or are taking orders through their digital platforms. But, preparing to broadly support these new vehicles requires more than simply installing a charging station and creating some sales tools. Understanding the complete BEV infrastructure, means taking a deep dive into its impact on the physical lot, the service department and overhead expense.

Rather than being overwhelmed by the breadth and depth of these changes, savvy dealers will find the opportunities to derive more value – and revenue – by taking a strategic approach to implementing a BEV infrastructure. Upgrading the dealership in a planned, deliberate manner will deliver a competitive edge and a satisfied customer. Let’s break down the opportunities to generate revenue through purposeful infrastructure improvements.

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