What can dealers expect beyond lockdown? We ask local and international experts for their take on life into 2022
Moving towards summer is traditionally a strong time for sales in our local market. This year, the combined effect of extended major state lockdowns coupled with semiconductor-driven supply shortages means the post-pandemic market is poised to rebound strongly as restrictions are eased.
After experiencing extended lockdowns in 2020, savvy brands, dealers and marketers are preparing right now to be on the front foot as key eastern state showrooms reopen for business.
First Bounce
As Australia entered 2021, the worst of the pandemic appeared over, with a strong sense of confidence returning to the industry and sales surged.
Buoyed by Q4, 2020 figures showing an 8.2 per cent hike in sales over Q4, 2019, FCAI chief executive Tony Weber set the scene to carsales by stating:
“2021 has a raft of new products scheduled for release, the cutting-edge vehicles bringing the latest technologies to Australia, and the competition in the market has never been fiercer.
“It’s an exciting time for brands, for their staff, for dealers, and the number-one priority, our customers.
“We look forward to Australia returning to better times.”
But as the semi-conductor story gained momentum and delivery delays set in, this initial confidence eroded and then crumbled as dealerships in New South Wales and Victoria closed their showroom doors, necessitating a need to become digitally savvy to remain competitive.
A leading view
Countries like the United Kingdom can give us some hints on what the auto industry may face and be able to capitalise upon as the economy gears up for post-pandemic market conditions.
The early COVID impact on UK retailing conditions showed in March 2020, according to Autotrader UK CEO, Nathan Coe.
“Literally, I was speaking to dealers each day and their sales were dropping off by 20 per cent a day,” Coe explained.
“We realised very quickly we were heading into lockdown, which happened in late-March.”
This first lockdown taste ran through to early June, though similar issues around automotive retailers and their classification frustrated in the UK as they did here.
“Car retailers were considered non-essential. We tried to lobby the industry group because garden centres and real estate agents were able to stay more or less open the whole way through. I would have thought car retailing was essential,” said Coe.
From mid-June car retailers could re-open, however a second lockdown hit during 2020’s Christmas period, taking until April 12 to re-open.
“During these lockdowns we found more consumers were using Auto Trader, a lot of people started submitting enquiries and leads. Interestingly that behaviour hasn’t reverted back, it has strengthened, so that surprised us,” Coe said.
“More people are now buying their car online at Auto Trader. We looked at our traffic levels and thought these would normalise [once out of lockdown] but we’ve not seen that. Lead volumes and top-of-funnel metrics are up by percentages that pre-COVID, we never would have imagined.
Supply stomped
While COVID and semi-conductors have dominated the UK market over the last two years, Brexit and the devalued pound before that had already set an era of tightened supply in motion.
“We are starting to see the ripple of four years’ worth of declining new car sales, because of all the ‘black swan’ events which are meant to happen once in a lifetime are happening once a year,” Coe said.
This lag has made it harder for retailers to secure high quality used stock. “The three year old cars aren’t coming to market,” Coe said.
Looking forward
Coe suggests that retailers should “be brilliant at the basics” through this time, while embracing the acceleration towards digital retailing. “For retailers I think it’s super exciting, because in getting this right you could map out the next 10 years of growth,” explained Coe.
For the consumer, that digital retailing strategy should be “a single linear journey,” said Coe, while retailers need a framework that encompasses all aspects of the journey to transaction, including items such as online reservations, finance and part exchange.
For businesses?
“You’re not going to have all consumers doing this immediately, but once you have that framework in place it’s going to be about optimising and convincing, Coe concluded.
A local approach
Moving to local shores, Matthew Wiesner, Managing Director Sime Darby Motors Australia – Retail says the changes his operation made in the thick of COVID are here to stay as showrooms re-open.
“When COVID hit, we immediately shifted our focus to amplify our online presence. It took some quick strategic thinking from our teams to implement new digital tools that helped us stay open for business.
“The opportunity to continue to service our customers in the thick of lockdown was a challenge but we created new and more convenient ways of doing business, including extended online hours, online payment facility, videos, contactless service, sales and delivery – and we’re proud to say these changes are now here to stay moving forward,” Wiesner explained.
Semi-conductor related shortages have been well publicised, and Wiesner acknowledged the challenge they’ve created, both in terms of stock acquisition and wait times for new cars.
“It [used car acquisition] has been challenging. With the delays we have faced with new car stock arrivals, it has been a key focus area for the business. We have had to look at new ways of acquiring used cars and focus on enhancing our internal processes to ensure our stock turn is strong.
On the new car front, Wiesner said it’s not all bad news with many consumers willing to wait – especially those adopting electrification.
“Semi-conductor and production delays have certainly impacted arrival of stock for our customers, however, most of our customers are happy to wait for their new vehicle to arrive. We’re noticing this increasingly due to the demand of new hybrid and electric models across our brands.”
Although showroom numbers are still down, Wiesner’s forecast for the industry ‘re-opening’ is positive. Wiesner intimated consumers’ extra online research and new car supply challenges have increased used car enquiry.
“Foot traffic is still not back to pre-COVID levels, however we have seen an increase in our [Sydney} CBD dealerships as customers emerge from lockdown.
“We have seen an unprecedented increase in online enquiry for both new and used cars, particularly through carsales sites during lockdown. This has stimulated our used car business as customers want to buy now rather than wait months for a new vehicle.
“[But] The digital space moves at a very fast pace, and we would like to continue to push the boundaries and be agile within it to stay ahead of the trends and deliver an outstanding and convenient experience to customers”.
Ultimately, the opportunity over the next 12 months is a closer relationship with buyers.
“I would like to see more connectivity with our customers… Discovering new ways of intuitively meeting their needs and wants in a way that is convenient and personalised for them [is the next step].”
Reading the tea leaves
As the Australian automotive market reopens for business and continues to evolve how can current consumer needs be met?
“Our most recent survey data¹ shows that customer demand remains strong but patience is wearing thin, with 50 per cent of respondents saying they are not willing to wait more than a month for a new car,” said Michael Holmes, carsales Executive Director – Dealer.
’50 per cent of respondents say they are not willing to wait more than a month for a new car’
“With restricted new car stock looking set to continue into 2022, people who are not willing to wait are moving on high quality used vehicles available today,” Holmes added.
“This is evident through the median dealer listing price rises we’ve continued to witness, with a 20 per cent price rise for September 2021 compared to September 2019² – before COVID took hold.”
On the front foot
Viewing the current situation holistically, Holmes has shared a ‘cheat sheet’ to ensure dealers are best prepared for the upcoming selling season in a post-pandemic market:
- Use data to understand market pricing. Cars shouldn’t to be priced too low or too high, because you’ll either be bombarded with leads (and costs) or there won’t be any enquiry at all. Don’t forget that consumers have had plenty of research time.
- The ability to work with customers on a remote basis should continue as a standard offering; for example, video calls and home test drive offers. These customer service features will continue to resonate with consumers and can be the difference between selling and not selling that stock.
- Work through vehicle options with customers, to truly understand their needs. The significant wait times for some new cars may provide other immediate delivery options in other vehicles in stock; whether new or used.
- Rotate you staff roster wherever possible. The percentage of leads made between 6pm and 11pm has continued to increase (in some dealers to over 40%), and personal contact and response to the consumer can be very effective in non-traditional working hours.
Footnotes
¹carsales COVID Buyer Sentiment survey, August 2021
²carsales internal data, September 2021
