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Andrew Diffenderfer is the co-founder and partner at Foundation Direct, a leading provider of tech solutions for search.

In this Episode we discuss the current state of the car industry and consumer behavior in the digital age. We also discuss the shift in the industry towards 2023 and what dealers can expect in the coming years, including the importance of putting as much emphasis on service and fixed operations as on sales. Andrew also touches on the increase in transaction prices and the trend of consumers choosing to service their cars rather than buying new ones.

As the auto industry continues to evolve, it’s important for dealerships to stay ahead of the game and prepare for the future. According to industry experts, the next few years will see a shift in consumer behavior and a change in the way that manufacturers approach the market.

One key trend that is expected to emerge is the rise of electrification in the auto industry. With many manufacturers focusing on producing more electric vehicles, it’s important for dealerships to be prepared to meet the needs of this growing market. While EVs offer a number of benefits, they also present new challenges for dealers and manufacturers. For example, the maintenance requirements for EVs are different than those of traditional gasoline-powered vehicles, and consumers may not be fully aware of these differences. In addition, there are distribution challenges involved in getting EVs to dealerships, as well as the cost of incentives offered by manufacturers.

Another important consideration for dealerships is the issue of retention. In the past, manufacturers have focused on the number of cars sold and the percentage of those customers who return for service. However, it’s important for dealerships to approach retention from the opposite perspective, by focusing on retaining service customers and using that as a way to sell more cars. Many manufacturers focus on retention rates based on the number of customers who return to a dealership for service after making a purchase. However, this approach may be backward, as it is often easier to retain a customer who has already received service from a dealership, regardless of where they purchased their last car. This means that dealerships should prioritize customer satisfaction in their service departments in order to increase retention and drive sales.

The average transaction price for a new car has increased by 3.1% from November 2021 to November 2022, reaching $45,872 according to JD Powers. This means that consumers may be more inclined to service their current car rather than purchasing a new one.

Andrew suggests that dealers should be considering the importance of their service and fixed operations department as they move towards 2023. Interest rates are expected to go up and inventory may still be constrained. However, people are fixing their cars more because they are unable to find exactly what they want or because it’s more expensive than they’d like. This means that manufacturers have an opportunity to focus on servicing and fixing cars, rather than just selling them.

Dealerships should also be aware of the changing consumer landscape and the importance of customer satisfaction. As brand loyalty decreases, customers are more likely to choose a dealership that provides excellent service and a positive customer experience.

Overall, the auto industry is entering a period of change, and it’s important for dealerships to be prepared for the future. By focusing on electrification, retention, and customer satisfaction, dealerships can position themselves for success in the years ahead.

The automotive industry is also expected to see lower volume but healthy margins in the coming years. The possibility of a decrease in new car sales and an increase in used car sales is also anticipated. Manufacturers will need to consider the cost of incentives versus wholesale and distribution challenges when determining their strategies. The next five years are expected to bring healthy profitability and higher volume, but it will be important for dealerships to find a balance between these factors and customer satisfaction.

In terms of buyer behavior, data suggests that there is a shift towards online search and inventory scanning, as consumers are taking more time to research their options before making a purchase. This means that dealerships need to be strategic in their marketing efforts, focusing on techniques such as search engine optimization and paid social media advertising to reach potential customers. It is also important for dealerships to have a strong online presence and to ensure that their inventory is up-to-date and accurately reflected on their website.

In the automotive industry, the upcoming NADA 2023 conference in Dallas, Texas is expected to focus on profitability and the transition to Google Analytics 4, as well as discussions on user privacy. As we move into 2023, dealerships should be aware of the importance of understanding their goals and categorizing their marketing activities as either demand creation or demand capture. In terms of marketing spend, it is important to target specific customers and tailor messaging to their specific needs and interests, rather than treating all website visitors the same. With the shift towards electric vehicles, it is also important for dealerships to educate themselves on the maintenance and service needs of EVs, and to consider offering specialized services and products to attract and retain EV customers.

Overall, it’s important for dealers to consider the shifts in the industry and how they can adapt to them in order to continue their success. By staying informed and adapting to these changes, dealerships can continue to thrive in a rapidly evolving market. Tune in for an insightful conversation on the future of the car industry.

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