Auto Industry Trends: 2023 and Beyond Will Be Great for Car Buyers
The auto industry is at a tipping point and things are about to get a lot better for consumers. Within the past ten years a majority of shoppers now start the car buying process online before heading to dealerships. That trend is driving prices down and sites like Edmunds, CarsDirect, and TrueCar are bringing more transparency to an otherwise murky transaction. But there’s still plenty of room for improvement. Even the most savvy Internet researchers get strong armed in the Finance Office when it comes time to close a deal. Fortunately, the industry is still in transition and how you buy a car is soon to drastically change.
Read: Car buying statistics and trends (2020 year in review)
and the impact of Coronavirus on car buying and the auto industry
Most pundits offer boring auto industry predictions that revolve around manufacturer production and sales numbers. But what does that really mean to you, the car buyer? How do industry changes affect your buying experience….and wallet?
Let’s take a different approach today and look at auto industry trends from the car buyer point of view. Here are my predictions of how things will change for car buyers over the next 3 years.
- Initial new car prices will drop while negotiated prices will level out because of increased competition and comparison shopping habits. More and more consumers will check the “True Market Value®”, “Target Price”, or get a “Price Report” at home or from their mobile device while at a dealership. The difference between the best deal on the market and the worst deal will slowly converge as car buyers can see what other people paid for the same vehicle. Manufacturer and dealer margins on car prices will continue to get slimmer and they will need to make profits elsewhere.
- The trend of LESS personalization will continue. Manufacturers pump out a limited number of variations of each vehicle to save costs. This will mean more pre-configured options you don’t necessarily want, but provide profits to dealership who can charge more because they will not provide an alternative.
- The trend of dealerships supplying cheap price quotes (teasers) for vehicles they don’t have in stock will decline. Car quote services usually allow you to configure a car with any options you want and request prices. But as I mentioned in my last point, dealers only stock certain configurations and may not have exactly what you request on their lot. That often doesn’t stop them from providing you a price on a non-existent vehicle, and then not tell you it’s out of stock until you get to the lot (or ask for a VIN# over email). Dealerships will get poor social media reviews for this sneaky tactic and over time bad ratings will weed out the more shady marketers…..although I don’t expect this tactic to disappear entirely.
- Google will partner with Edmunds or TrueCar and dominate the market for online car leads. Google has already announced they will be entering into the auto lead business, but they are missing one key element that the major lead brokers have. The missing element is historical data from dealerships about sales prices to show car buyers what they should consider a good target price. Google will need to partner with Edmunds or TrueCar to provide market data so that something like Edmunds True Market Value® or the TrueCar Price Report can be incorporated directly into search results along-side prices.
Now why would either of these companies want to partner with Google? Because Google is the clear leader in search and a partnership would make their lead business jump through the roof without a financial strain. Right now they shell out millions for PPC ads and partnering will make more financial sense and ensure proper placement in search results. Not only that, but an agreement would allow them to show dealer results and a target price right on the search screen rather than having to click through and perform a second search.
- The transition to Google means getting car prices will be easier. You won’t have to enter all your contact information (as a lead) in order to see prices at local dealerships. (Car hacks may eventually become obsolete). You will be able to search for a “model+options”, sort by cost, and click through to view all the details similar to how you would search for prices on flat screen TV’s. This will be a major shift in how lead brokers are used to operating, but I see it as inevitable. Can you imagine searching for a big screen and having to enter your phone number, email, and address in order to see a price? Online retailers would lose a lot of business and so will car lead brokers if they don’t get with the program. Also, because prices will be so much easier to get, competition will increase and prices will be driven downward. We’re likely to get to a point where you won’t have to negotiate at all after getting car prices online because car dealers will provide their lowest cost up front (just like online electronics retailers).
- You’ll be able to complete an entire car purchase online. After getting a price, you will be able to finish the whole transaction online including your financing and trade-in. You can already get auto financing from online lenders and dealerships will follow suit or partner up. Same goes for your trade-in, you can already go to AutoTrader and get a free online appraisal valid for 72 hours and a service like this will be offered at the point of sale through local dealerships. Note: You’ll still have to negotiate your trade-in at the dealership as online offers will likely be low.
In some cases (if you don’t have a trade-in) you won’t even have to visit a dealership to pick-up your car. You’ll be able to sign everything on line (using something like Escrow.com and SignNow) and the car will be delivered to you. High-end dealerships already do pick-up and delivery for service requests – in fact, my father is one of the drivers!
- Bundling with new markets: We will see a variety of new cross promotional pushes like the travel industry (airlines, hotels, and rental cars) and credit cards. For example, Ford could partner with Avis Rent-A-Car, so if you bought a Ford you’d be enrolled in the Avis Preferred program and get special discounts if you rent from them while traveling. I also expect to see credit card companies in the mix allowing you to sign-up for a rewards card at the point of sale and use it for a portion of your down payment.
- Dealers will start partnering with car wrap companies and offer discounts at the point of sale to those who sign up to be a moving advertisement. If a car dealer offered you a $1000 discount for a car with a Sheetz logo, would you sign up to have your new car wrapped in an ad?
- Post purchase feedback will become much more social. After a sale, car dealers are currently rated through a CSI survey or WSI survey where feedback is directly tied to their bonuses. Surveys and ratings like these will shift into social media to take advantage of the marketing element. Dealers have always pushed for positive feedback but when results are public, they may even try things like offering a free oil change in exchange for “liking” a dealership or posting survey results on your Facebook wall after you buy a car.
- Legislation will be introduced to require electric car charging in business parking lots. For example, companies with more than say 200 spots will be forced to offer charging stations (which may be subsidized) to encourage EV adoption.
- EV charging stations will make more money than gas stations and pop-up everywhere. Businesses will take advantage of the time required to charge a car and the resulting captive attention from consumers. They’ll sell through convenience stores, book stores, hair salons, health clubs, and tons of other options for people to spend their money while they wait for their cars to charge.
- Moped sales in the US will skyrocket and shoot up at least ten-fold. Younger people on tight budgets will adopt the European model and buy the much lower cost form of transportation. It might even become trendy to own a moped and the negative stigma will quickly disappear.
I’m optimistic that many of these auto industry changes will come true because they’ll mean lower prices and an easier purchase process for car buyers.