Innovation is one of those buzz words that has, frankly, been overused lately. While once reserved for scions of industry like Henry Ford and Eli Whitney, today the concept is applied to any new product modification or brand positioning. But without true innovation – and the people who are driven every day to invent the next new thing – we would miss out on a lot of great ideas.
What does innovation mean in the retail automotive industry? Some might say that little has changed in the dealer showroom. However, according to global professional services company KPMG, the auto retail industry is undergoing significant changes, driven by technological advancements, evolving consumer preferences, and increasing competition. Their survey of auto retail executives found dealer principals are primarily focused on financial performance, with an emphasis on revenue growth.
But dealers continue to struggle with inventory management while managing costs, enhancing customer interactions, improving target marketing, and fine-tuning financial operations. According to the Cox Automotive Q2 Automotive Dealer Sentiment Index, the new-vehicle sales index improved for the second straight quarter and inventory levels are growing. However, challenges remain for used vehicle sales and inventory, complicating floorplans and end-of-year forecasts.
KPMG survey respondents say they are taking a three-pronged approach to prioritizing investment decisions, with nearly equal weight placed on upgrading technology and infrastructure, enhancing the customer experience, and expanding their dealership footprint. While over 50 percent say foot traffic in person and online is in line with expectations, those same respondents are using targeted marketing to increase sales through customer conversion.
Innovation can be found in many of these areas. More than 30 percent are using AI to improve customer interactions, followed by nearly 20 percent who are applying AI tools for price optimization, accounting, and finance. We are in the early stages of many of these AI tools and I expect we will see more AI innovation in the days to come.
But innovation isn’t only applied to products. Having a culture of innovation is equally important, fostering a sense of acceptance of new ideas and approaches. For the eighth year in a row, our employees ranked us as one of the most innovative business services companies in North Texas. Even more impressive, we continue to score higher than our industry peers. These results are based on our annual employee survey administered by Energage, the company that powers the nation’s premier employer recognition program, Top Workplaces. According to Energage, our employees feel respected, feel their ideas are encouraged, and believe the company is committed to fostering a collaborative culture that delivers more value and profitable results for its clients.
I could not be prouder of our EFG team and their relentless willingness to engage and contribute to deliver client success. Bringing this innovative spirit to work every day pays more than financial dividends. It creates a strong bond among our staff. During this season of Thanksgiving, I’m grateful for our clients to entrust their business to us, our partners who collaborate with us, and our employees who strive to innovate every day.
With almost five decades of industry insight, EFG wants to be your business partner in the retail automotive industry. Contact us today to learn more about how our team can help you achieve your dealership goals.