How the Automotive industry can navigate success
The automotive industry has been through a testing time over the last year, but there’s a few hints to suggest that a strong end in 2021 is achievable.
First let’s take a closer look at some of the top challenges affecting growth and stability in the automotive industry.
Automotive manufacturers
Global production was down by 15% in 2020 compared to 2019, and the pandemic caused UK production to slump to lowest levels since 1984. This is causing concern for many people on the future price hikes and although production is back, manufacturers globally are facing production issues and backlogs for an entirely different reason, and that’s due to the semiconductor shortage. Land Rover paused production at their plants in the UK and Slovakia, with BMW also airing their concerns and Toyota recently announced its cutting production down by 40%.
There are promising signs that the end of the semiconductor shortage could be in sight thanks to China, however, the ripple effects will be slow, so understanding how best to address the current landscape for your business while the shortage and backlog is resolved is going to be key.
Car Dealerships
Dealerships have had the immense challenge of adjusting to the drastic change in consumer buying behaviours whilst keeping up with major sales targets. Some behaviours such as upgrading from diesel, moving to EV (through government grants) or new plates have become more of the norm in the last few years, however the pandemic brought other behavioural shifts which have presented further opportunity:
- Working from home (WFH)
- Reluctance to use public transport
- Additional vehicle requirements
- Change in vehicle requirements
The demand to change cars is high, and with consumers that have been through lockdown having more disposable income, there’s been no better time to find and sell to these audiences. During the lockdowns, doors were closed to the public and many Dealerships had to rely on click and collect, which meant an aggressive focus on developing digital marketing strategies to better target these audiences for sales.
Car Dealers forecourts have been open for a while and the uplift in footfall is promising. Dealerships and online marketplaces have developed their digital presence further, and this progress needs to continue, to ensure the right audience targeting will bring value to your business.
The high demand and backlog for new vehicles is in place but with the semiconductor shortage still straining the new car market, supplying the right vehicles at the right time, and keeping consumers happy is becoming tricky.
Demand is high all around, but we know there is an issue with supply – so what can be done?
The challenge and opportunity are to provide close alternatives that are more easily accessible, and this will yield positive results and keep customers happy. Potential new car buyers may switch to a premium used car due to long-lead times, so it’s imperative to find the right buyers who you have alternative solutions for.
Online marketplaces
With the majority of car buying journeys starting online and the increased number of car buyers, lockdowns provided the perfect opportunity for online marketplaces to flourish.
Online Marketplaces have seen exponential growth with the used car market being very hot right now, so the need to have the right source of vehicles to satisfy demand is going to be key for sustainable growth and scalability.
It’s going to be critical in the upcoming months for car dealerships and online marketplaces to adapt to the current landscape until the manufacturing issue and backlog is eased.
What can you do?
Whilst not everything is within your control, there are steps that can be taken to alleviate some of the pressures. Ensuring you have a back-up alternative for those buyers is going to help that buyer complete a purchase with you versus them looking elsewhere.
The pandemic had many challenges but there is a positive in the consumer behaviour shift. Take a look at the different changes below and see how targeting can get so specific, that you only attract the right consumer at the right buying stage:
- Less travel for those working from home
- Reluctance to use public transport
- Additional vehicle requirements
- New plates
- Upgrading from diesel
- Moving to EV
- Travel chaos pushing users to staycations
The demand is there for vehicles and so figuring out how you can align your available inventory to focus on the right buyers in this climate is fundamental until supply issues are resolved.
What’s becoming crystal clear is that focusing on the right audiences to match up available inventory is going to yield positive results. How you align your inventory to focus on the right buyers is your best bet for now until production eases.
For many, the cost to finance a vehicle can be one of the biggest blows in their wallets. The amount of money they have to shell out to keep their cars on the road depends on many factors, such as current supply troubles, credit score, type of vehicle, and loan term. Bankrate created a guide citing the importance of understanding typical monthly payments and rates in order for buyers to get the best deal. Understanding the common challenges affecting your audiences and how they will approach the challenge is crucial.
We know that focusing on the right audiences to match up available inventory is going to bring the most successful results now, and in the future – but how do you do that?
Well, with 59% of the car buying journey starting online, we know that’s the best place to be. There are various digital marketing channels that can help you get in front of buyers but none with the reach of digital advertising.
Why digital advertising?
Once considered a generic blanketed approach purely for brand awareness, digital advertising has matured to include a variety of targeting tactics that can support the auto industry to drive:
- Leads
- Online finance completions for pre-approval
- Click-to-buy features
- Online trade-in valuations
It’s all about how you can tap into a consumer’s mindset to understand where they are in the buying journey, and target them accordingly with the right inventory or message.
With competition heating up in the digital landscape, it’s crucial to focus on tactics that can help you target and connect with buyers in the later buying stages for fast results and return. The best tactic for this is Geofencing, and by applying this targeting method, it can enable you to:
- Get in front of your competitor’s visitors and entice them to come to you instead
- Engage with potential buyers when they’re online
- Pull previous visitors or buyers back into your showroom or marketplace
- Target potential buyers looking for similar vehicles
- Combine national brand awareness campaigns with local advertising
Geofencing works by drawing a virtual polygon fence around a specific location such as a postcode and defining the radius you would like to target around this fence, along with the recency which can be up to 1 month. That means anyone that passes through these Geofences will be marked for the appropriate targeting and messaging. Find out more on how Geofencing can be applied to car dealerships to boost business performance.
There are a host of targeting tactics available through digital advertising, so selecting the rights tactics dependant on your goals can help to:
Match available vehicles to the right buyers online
- Ensure you only invest budget & resources working with the available inventory you have
- Focus your search keywords on available inventory in your Search & Display campaigns
- Use ad technology that enables you to connect to a data source, such as your inventory to automatically populate ads which alleviates ad design from your creative resources and means your only advertising stock that is available with up to date pricing and offers
Drive quality footfall to your physical showroom
Using a combination of Search keywords with Geofencing Ads enables you to target users looking at specific vehicles in a certain location. This is a very powerful tool when used with
- Local competitors to entice more immediate buyers to your showroom
- Nearby car servicing centres
- Your own location to re-engage visitors
Increase traffic to your website or app
Using a combination of Search keywords to target users looking at specific vehicles via
- Online competitors
- Contextual advertising
At Fluid Ads, we use digital advertising to solve challenges and achieve goals whether it’s promoting the right inventory, finding the right buyers to promote your offers, acquiring new leads, or generating sales.
With so much happening in the automotive world, we know finding the right tactics to best address the current challenges are paramount to success and growth.