The global shortage of semiconductors is impacting the auto industry on a massive scale, hindering production while dealer inventory declines and consumer demand grows. LMC Automotive noted that at the end of March 2021, U.S. vehicle inventory was at the lowest level in more than 10 years.
Prior to the chip shortage, auto dealers faced challenges from COVID-19 shutdowns and halts in manufacturing. Dealerships were also forced to re-think how to sell cars, launching “virtual showrooms” and “contactless drop-off,” and those who embraced these practices saw their sales rebound and increase. Consumer demand was high as many consumers had more disposable income combined with a backlog of lease renewals. Auto dealers were looking forward to 2021 as the worst appeared to be over.
Unfortunately, the chip shortage has disrupted vehicle supply in a major way as semiconductors are necessary for new vehicle technology production, and they enable most of the innovations in new vehicle development. Cars, trucks, and SUVs have become more advanced, with modern vehicles featuring enrichments like mobile phone integration, heads-up displays, self-directed driving, comfort, and vehicle performance – all of which are powered by semiconductor chips.
Some OEMs have shut down production completely for weeks at a time due to the lack of chips necessary to build new vehicles. While chip production begins to ramp back up to meet demand, dealers can pivot now to a fixed operations focus to offset the loss in revenue.
Increased Focus on Service and Parts
Fixed operations account for more than 50% of a dealership’s profit and is now more necessary than ever for continuation and bottom-line growth while there is a lack of available inventory. Demand for new cars, trucks, and SUVs has recovered from the pandemic shut down, but without an adequate supply of new vehicles, dealers need to be seeking other ways to drive traffic and dollars into their dealerships.
Ansira has been helping automotive OEMs and dealers drive incremental traffic for service and parts since 2009. We create unique experiences tailored to the customers’ needs, driving engagement with dealerships with the goal of growing customer pay repair orders and service appointments.
Scalable, Local Digital Marketing Solutions for Auto Brands
Domestic and international automotive OEM brands are seeing, on average, a 135% – 250% ROI on their custom Ansira programs.
Since 70% of vehicle owners conduct online research for service and parts before booking an appointment, local dealers can increase their traffic through paid search and display advertising. By focusing on allocating media dollars strategically to increase after-sales customers, dealers are seeing five to 11.5 times more impressions.
During their search, consumers are looking for certain dealer insights prior to booking an appointment:
Dealers can maximize their digital media spend online by leveraging their budget and cooperatively gaining more impressions and clicks from paid search with Ansira as their partner
The chip shortage is here to stay for the foreseeable future. Some researchers have forecasted that it will inhibit the automotive industry into 2022, and vehicle inventory won’t return to former levels until 2023. In turn, the auto industry is expected to lose out on $110 billion in revenue in 2021.
Dealers and OEMs need to be thinking about how to replace revenue they would have gained from vehicle sales with revenue opportunities from service and parts. Want to learn how Ansira can drive sales growth for your dealerships? Contact us today.