What Does The 2017 Auto Market Slowdown Mean For Your Dealership? (No Really, I’m Asking You)

May 16, 2017 | Industry News, Sales and BDC

If you’re a glutton for auto industry news like I am, I’m sure you’ve seen a volume of articles around “2017 auto sales plateaus,” “new vehicle slow downs,” and “auto cycles ending” over the last few months.

Woof. How optimistic.

But reassuring or not, there’s no denying that something is happening at the industry and OEM level. The question is whether it’s affecting your store.

First, The Industry Trend:

In April, U.S. industry sales of new cars and trucks fell 4.7% to 1.43 million units, the fourth consecutive decline in monthly sales.

This has placed pressure on the OEMs and caused the average incentive for a new vehicle to climb above $3,000 (16% higher compared to last year).

In an article published by USA Today, Jessica Caldwell, Edmund’s director of industry analysis, said, “Considering that we have had seven years of growth, industry sales had to come down at some point.”

Here are a few articles that have taken over my inbox lately:

And, a few stats from those articles…

  • In April, sales fell for six out of the eight top-selling automakers in the U.S.
  • April reported an industry-wide 4.7% sales decline to 1.43 million units
  • New vehicle incentives are 15-16% higher than last year
  • Through April 16, the average incentive for a new vehicle was $3,499 (previous record of $3,393 was set in April 2009)
  • Through April 13, the average new vehicle sat on the dealer lot for 70 days
  • ~30 percent of new vehicles sold in 2017 were on the lot more than 90 days
  • By 2019, ~12 million low-mileage vehicles are coming off leases from 2014-2016

But despite these stats, Mark LaNeve, Ford’s VP of Sales and Marketing said, “We have to let the year play out. I am not discouraged by the numbers. I view it as within some kind of normal range in a plateauing industry.”

Are your dealership’s new-vehicle sales increasing, or “plateauing?”

Surprise: I Don’t Work At A Dealership.

I’m not a dealer. I really don’t know how much dealerships’ sales are being affected at the local level.

And I sure as hell can’t talk shop or share insider secrets if I don’t even know if most local dealers are feeling the slowdown.

All I know is when AutoNation is launching up to 100 new AutoNation USA used-vehicle stores, with the first five opening this year…

…and the industry turned the second-highest amount of CPO units ever over the last two months, and four OEMs had new all-time highs for monthly CPO sales…

…and our Co-Founder is doubling-down on his pre-owned inventory ads on Facebook…

…and a large wave of leases are flooding back in this year…

I’m Thinking Investing In Pre-Owned Is The Next Logical Move

In a recent interview, CEO of AutoNation explained his optimism toward pre-owned and how he looked forward to growing pre-owned business significantly in Q2 and long-term.

It seems to me that pre-owned should be a high priority right now for local dealers, too.

Are you trying to drive more conversations around your pre-owned inventory in 2017?

How Do Pre-Owned Shoppers…Shop?

I want to quickly dive into the differences between how New and Used shoppers navigate the buyer journey.

While both groups do the majority of their vehicle shopping online, used vehicle buyers do a little more (15 hours compared to 13).

READ THIS NEXT: “Dealers, Stop Trying To Bring Customers To Your Dealerships.” Love, Digital Dealer 22

The real difference comes in how (and where) that time online is spent.

According to the chart from Autotrader above, used vehicle shoppers were spending significantly more time (20%) on third-party listing sites compared to new.

And used-shoppers have consistently used third-party sites above all other sources (dealer sites, search, OEM sites).

I know you’re on third-party listing sites. But which ones? What are your costs per lead?

And—most importantly—do you feel like they’re helping you increase new-vehicle sales in 2017?

DISCLAIMER: Shameless product promotion

At DU, we’ve seen Craigslist vehicle listings do wonders for pre-owned (I’m talking generate triple the inbound sales conversations around pre-owned over 30 days).

The best part is that these calls are recorded so dealers don’t have to “feel” if they’re working or not—they know.

And I’ve had a first-hand experience that proves CL shoppers are lower-funnel than your typical third-party shopper…the rumor is that they close 13 days faster and at a 12% close-rate.

I’d say that’s pretty accurate since I bought my prized 2005 Tacoma off Craigslist a few years ago, and I signed the title less than 2 weeks after my initial online search.

Learn more about how we use science to post the right cars at the right time into the right Craigslist markets.

I really don’t care what you use…

…so long as it’s working and it’s with a vendor who’s doing right by you.

If pre-owned is about to get the spotlight I think it is, just make sure you are posting ALL of your used inventory out there, and fast.

…But What Else Can You Do To Stay Above The Sales Slump?

Maybe you’re focusing on ramping up marketing efforts around your parts and service centers in addition to pre-owned, since the average U.S. vehicle is a record 11.5 years old.

Or maybe you’re focused on recruiting, training, energizing your team to improve your dealership’s new-vehicle sales.

Or you’re still transitioning your dealership from offline to online (since consumers are visiting less than 2 dealerships before making a buying decision).

Or perhaps your sales are so freaking awesome right now you’re not doing anything differently.

The truth is…I don’t know.

Will you tell me?

The Real Question: What Does This Look Like For LOCAL DEALERS?

For you?

Are your numbers down and causing your team to slump into sales meetings?

Or are you rolling in qualified leads?

Tell Me

And—regardless of your answer to the above—is there ONE thing, one strategy, one solution, you’re doing this year that you think will keep you invincible if new-vehicle sales do end up declining?

Let me know in the comments below!

Blog Author - Brooke Jensen

Written By Brooke Jensen
Brooke handles all of Dealers United’s digital marketing. In addition to her love for design and copy, Brooke also adores her two dog-like kittens, playing the electric violin, and walking barefoot around the office.

Who is Dealers United?

Dealers United is a game-changing automotive company dedicated to helping auto dealers improve their dealerships. We have helped over 6,500 dealers nationwide cut costs, save time, and sell more cars.

Want our best articles delivered right into your inbox? Start receiving our best articles, tips for your dealership, and more by adding your information below.



Register for the webinar, “The 3 Biggest Facebook Mistakes Even Advanced Dealer Marketers Are Making”!