The car dealership business is a notoriously tough and competitive one. But the sector also sees a lot of demand, and there is always a way to make a niche for yourself.
New car dealerships have to face many challenges, especially those in big markets or saturated ones. Starting a car dealership business is a challenge no matter where you are.
However, by being prepared for it, you’ll be able to avoid some of the mistakes new dealerships commit far too often. Here are some of the common challenges new car dealerships have to face.
1. Staffing
One of the biggest issues a lot of new car dealerships have to deal with is finding the right people. Some decide to go based on their gut and hire people because they feel good about them.
While someone may look like a great salesperson, that doesn’t mean that they will mesh with the rest of the team. Salespeople tend to be very competitive, and while it can help in certain situations, it could lead to conflict on the ground, and you don’t want that.
Everything starts with writing job descriptions that push your priorities. Then, you need to pre-screen less qualified candidates and consider them if you think they are the right fit.
Interview them in person, but try to keep the tone conversational instead of going for a more structured format. Have a few of your people present to see their dynamic and allow them to ask questions too.
2. IT
Many dealers come into the business not realizing how important technology is today. And, while there are some who are hell-bent on doing things the old-fashioned way, they are falling behind and probably dealing with all sorts of inefficiencies.
For instance, a dealership that doesn’t have a customer relationship management service in place will never be able to offer the same level of service as one that does. If you want to compete in this space, you have to implement technology aggressively, but also have control over your systems.
In this case, outsourcing to a third party could be a good solution. You could use dealership help desk services to transfer technical issues fast or handle them yourself. Cybersecurity is very important as well as keeping your systems up to date and having a recovery solution. These are all things that you’ll get from working with a good managed IT service.
3. Marketing a New Car Dealership
Marketing is also a major challenge for many new dealerships. Traditional methods should not be neglected, but they aren’t as efficient as they used to be. They have to be ingenious and turn to new solutions such as local search marketing and social media.
Some may also not realize the potential of classified sites and overlook them in favour of costlier, flashier, but ultimately less efficient and more expensive tactics.
These are all challenges new car dealerships have to be ready to deal with. Make sure that you are ready for those, and start with a solid plan based on hard data and expertise.
4. The Changing Expectations Of The Customers
Customers keep changing their expectations and this is a problem that car dealerships have to face.
However, as opposed to other factors, this is something that is not so difficult to fix. However, this is only possible when the phenomenon is properly understood. Here is what you have to remember about the topic:
- Customers make decisions faster than ever. This involves everything from thinking about buying a car to the actual purchase. In fact, the entire process completes in just nine weeks. As a result, car dealers have to speed up the services they offer.
- 83 per cent of consumers in the US want to experience some sort of online interaction when they buy a car. This means that car dealerships have to be able to offer such a service to their customers.
- Most shoppers these days prefer the car dealership that offers digital retailing steps. Even one step can be very important. Dealerships need to work hard to improve their online presence.
For car dealerships to be successful in this day in age, adaptability is what counts the most. The process is quite straightforward when referring to adapting to customer behaviour and expectations because of the fact that customers these days tell businesses what they want. It is up to the dealerships to take this into account.
The good news is there are different ways to implement technology into modern dealerships. For instance, an application like AutoFi allows integration with any existing website. This would allow the potential customer to quickly search the inventory of the dealership, choose the desired vehicle, find good products, choose financing terms, and even complete transactions. Everything is practically done online and website integration is very simple.
As consumerism sees changes in trends and technology, new challenges appear for car dealerships. However, the dealerships always have some opportunities available to gain some sort of market share. This is possible through business evolution, as long as the purpose is to align with the expectations customers have.
5. The Growth Of Ride-Sharing Apps
Lyft and Uber are just two examples of several ride-sharing apps that appeared in the past years. They are important because they offer a mobile app, actively prevent impaired driving, and can be very efficient when you need to move around in an urban space.
Contrary to popular belief, it is not just the taxi companies that suffer because of ride-sharing surges. Car dealerships are also highly affected by this.
Also, there is absolutely no sign that this is just a temporary problem. By the year 2030, it is expected that the ride-sharing industry will reach a value of $285 billion.
Keep in mind that technology keeps changing things. This is true for all industries, including car dealerships. However, at the same time, technology brings forth opportunities. Consumers will always need cars, even if ride-sharing apps are preferred.
Innovation and technology have the possibility of aligning with changes customers want and business growth. You have to recognize the fact that consumers will use Uber and Lyft when convenience is needed. This is not something to generally focus on.
The biggest focus for car dealerships should be to increase the experience that they create for potential customers. If the business can create a streamlined, smooth experience, only success can happen.
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