The impact of urbanization on dealerships

As cities expand and urban living becomes the norm, dealerships must adapt to the changing mobility needs. Urbanization brings unique challenges and opportunities, from the rise of micro-mobility solutions to evolving service needs. As dealership owners and operators, understanding these trends and implementing effective strategies can make all the difference in staying ahead in this dynamic market.

Who’s Moving Toward Urban Living 

We’re reading more and more about people leaving cities to live a more rural life, but that’s not happening with younger families. Why? The  Railyards  says there are many reasons why today’s parents are moving their families to big cities and urban areas; here are seven of the biggest.

1. More job growth and better pay  

2. Proximity to entertainment, jobs, retail/ shopping, dining 

3. Eco-friendly living is important to younger families 

4. Educational opportunities that rival suburban schooling 

5. Access to culture, sporting events, museums, and art 

6. Cities are safer to live in than rural areas when comparing specific metrics 

7. Opportunities to socialize and build relationships 

Even though sources like Gallup show more people are considering rural living, reports show that 69% of the world’s population will live in urban areas by 2050. Being prepared and spotting the trends in your area will help you stay ahead of the curve.

Understanding Your Urban Landscape 

Urban Mobility Trends: The Rise of Micro-Mobility: The urban environment is transforming rapidly, with more people moving to cities, often from other parts of the world. This shift has introduced new mobility trends, such as micro-mobility solutions like electric scooters, bikes, and ride-sharing services. These alternatives offer convenient and eco-friendly ways to navigate the city, reducing the reliance on traditional car ownership.

Impact on Car Sales with Shifting Preferences: Urbanization has led to changing preferences in vehicle ownership. With limited parking spaces, traffic congestion, and the availability of public transportation, many urban dwellers are reconsidering the need for personal vehicles. This shift has contributed to a decline in car sales in densely populated areas, urging dealerships to rethink their sales strategies and inventory mix.

Service Needs and Adapting to Urban Customers: Urban customers’ service needs are also evolving. Less reliance on personal vehicles, maintenance, and repair services may decrease demand. However, the rise of fleet services, ride-sharing vehicles, and micro-mobility solutions opens new opportunities for dealerships to provide specialized services tailored to these segments. According to McKinsey, by 2030, shared mobility could generate up to $1 trillion in consumer spending.

Strategizing for Urban Success 

Diversifying Offerings and Embracing Micro-Mobility: Dealerships can tap into the growing micro-mobility market by offering electric scooters, bikes, and other compact transportation solutions. 

This diversification caters to urban customers’ preferences and positions the dealership as a versatile mobility provider. As the customer’s needs grow, you’ll have a relationship established that makes you the go-to person for a vehicle purchase.

Flexible Ownership Models and Subscription Services: While it didn’t catch on with OEMs, you should consider introducing flexible ownership models, such as vehicle subscription services. These services allow customers to access a vehicle without the long-term commitment of ownership, appealing to urban residents who prefer short-term mobility solutions. Companies like  SIXT+ have pioneered a market for car subscriptions that give customers mobility at an affordable price without a long-term commitment.  

Enhancing Digital Presence with Online Sales and Services: In urban areas, convenience is vital. Enhancing your dealership’s digital presence by offering online sales, virtual consultations, and at-home test drives can attract tech-savvy urban customers. Additionally, providing online scheduling and mobile servicing options can streamline the service experience.  

Implementing Effective Strategies 

Building Alliances with Partnerships and Collaborations: Form partnerships with local businesses, ride-sharing companies, and micro-mobility providers to create synergies that benefit all parties. Collaborations can include co-branded promotions, service packages, and shared marketing efforts, expanding your reach in the urban market. 

Targeting Customers with Tailored Marketing Campaigns: Based on sound research in your market, develop marketing campaigns that resonate with urban customers. Highlight the benefits of micro-mobility solutions, flexible ownership models, and the convenience of digital services. Use social media, local influencers, and targeted online ads to reach your audience effectively. 

Investing in Infrastructure with Charging Solutions and Service Hubs: If you see a need, invest in infrastructure that supports electric and micro-mobility vehicles. Installing charging stations at your dealership and creating dedicated service hubs for electric bikes and scooters can position your dealership as a one-stop shop for urban mobility needs.

Adapting and Thriving in the Urban Environment 

Customer Feedback: Continuous Improvement 

Engage with your urban customers to gather feedback on their needs and preferences. Use this information to continuously improve your offerings and services, ensuring you stay relevant in the ever-evolving urban landscape.

Empowering Your Team through Training and Development: Invest in training programs for your staff to ensure they are knowledgeable about micro-mobility solutions, electric vehicles, and digital service platforms. An informed and adaptable team can provide exceptional customer experiences and drive loyalty.  

Embracing Sustainability with Green Initiatives: We’re told urban customers are increasingly conscious of their environmental impact. While embracing sustainability by incorporating green initiatives into your dealership operations is good, we wouldn’t suggest going to an EV-heavy inventory.   

The reality is that public charging infrastructure still needs to be built, regardless of the millions local and national governments provide. Also, multi-family home charging  is challenging in every part of the US. If it fits your brand, promote eco-friendly vehicles, implement recycling programs, and highlight your commitment to reducing carbon emissions.  

However, if your brand is about providing the best low-cost, reliable transportation and a product mix that fits your customers, stick with that. 

Planning the Future of Urban Mobility 

As urbanization reshapes the automotive industry, dealerships and OEMs must adapt to meet the changing needs of urban customers. By diversifying offerings, embracing digital solutions, and forming strategic partnerships, dealerships can thrive in this dynamic environment.  

Remember, the key to success lies in understanding urban mobility trends in your area, planning effectively, and taking proactive steps to cater to urban dwellers’ evolving preferences. Doing so allows you to flow with the urban shift and drive long-term success and customer loyalty.