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Overcoming challenges facing dealerships and innovative solutions

In 2024, leaders in the retail automotive industry are navigating a complex landscape filled with unprecedented challenges. Dealerships must address critical issues such as supply chain disruptions, evolving customer expectations and rapid technological advancements. This article looks into these key obstacles and offers a few actionable suggestions to help dealerships thrive in an increasingly competitive marketplace. 

Key Challenges Facing Dealerships 

Supply Chain Disruptions 

Global supply chain disruptions have significantly impacted dealership inventory and vehicle availability. The ripple effects of the COVID-19 pandemic, geopolitical tensions, and logistical bottlenecks have strained the flow of parts and vehicles.  

While showing some signs of improvement, the semiconductor shortage has significantly affected dealership stock levels and sales for multiple brands. The inevitability of future disruptions is a harsh reality, and it’s only a matter of time before the next one strikes.  

Evolving Customer Expectations 

Armed with a wealth of information and ever-increasing expectations, today’s customers are reshaping the landscape for dealerships. The shift towards online research and purchasing has completely transformed traditional car buying. Customers now expect personalized and seamless buying experiences, both online and in person, which presents a new challenge and opportunity for dealerships.  

Stories abound of customers who’ve completed all requirements online and arrived at the dealership expecting a fast transaction but instead waited for two hours while the staff completed the paperwork.  

Technological Advancements 

While integrating advanced technologies in vehicles, such as battery electric vehicles (BEVs) and autonomous driving features, may seem further away today than anticipated, regardless, dealerships need to keep pace with these advancements.  

According to recent studies, complicated infotainment systems have become a substantial source of complaints among new-vehicle owners, significantly contributing to a decline in the Customer Satisfaction Index (CSI) for new cars. As the adoption of self-driving and BEV vehicles increases, these issues will likely become even more pronounced.  

Innovative Solutions to Address Challenges 

Mitigating Supply Chain Issues 

To combat supply chain disruptions, dealerships must adapt to the realities of their business, including reliance on a single supplier for vehicles and parts per brand. To combat new vehicle shortages in the future, dealerships should continue to use the innovative strategies developed during recent shortages, such as creative methods for acquiring used cars, to ensure a steady inventory.  

Utilizing data analytics for inventory management and forecasting provides better visibility and control over stock levels, ensuring they can more effectively meet customer demand. Keeping the playbook for used car sales open and adaptable is crucial for maintaining flexibility and resilience in the face of potential supply chain challenges. 

Enhancing Customer Experience 

To keep pace, dealerships must leverage digital tools such as online sales platforms and virtual showrooms. Implementing customer relationship management (CRM) systems is essential for offering personalized services and maintaining consistent client communication.  

Given that complicated infotainment systems have led to customer complaints and a decline in the Customer Satisfaction Index (CSI), dealerships should prioritize staff training for in-person and online interactions. Addressing these issues is crucial to transitioning to more technologically advanced vehicles. 

Adapting to Technological Changes 

Despite the long road ahead for the widespread integration of advanced technologies like battery electric vehicles (BEVs) and autonomous driving features, dealerships must stay proactive in keeping pace with these advancements. Investing in staff training and development is crucial to equip fixed and variable ops employees with the skills to handle new technologies effectively.  

As the adoption of self-driving and BEV vehicles increases, Customer Satisfaction Index (CSI) issues will likely become even more pronounced. Addressing these challenges before they become critical is vital to ensure a smoother transition to technologically advanced vehicles while maintaining high levels of customer satisfaction. 

Summary 

By preparing for supply chain disruptions, meeting evolving customer expectations, and adapting to technological advancements, dealerships can position themselves for growth and profitability. Proactive innovation and a commitment to excellence are vital to thriving in this retail automotive sector.  

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Arthur Michalik
Arthur Michalik
Arthur Michalik: Even before graduating with a degree in Journalism, Art was already contributing to the automotive industry. He’s worked as a freelancer, staff writer, magazine editor, ad agency exec and Tier 1 marketing leader. Art focuses on developing engaging, informative content for several automotive-specific sites.

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