How Auto Dealers are Preparing for the Future of the Automotive Industry

January 7, 2022 John Kehm

While dealerships have been adjusting to their “new normal” since 2020, increasingly challenging inventory shortages brought a new meaning to the phrase in 2021. Despite this, ongoing inventory shortages, rapid digitalization and changing consumer preferences are still creating new opportunities for dealers in 2022.

To make the most of their available opportunities in the year ahead, dealers need to embrace changing industry trends and adapt their sales and marketing processes to meet new consumer demands and deliver the experience buyers want.

In this blog post, we share three ways dealerships of the future are already thinking ahead and preparing for success in 2022, including:

  1. Developing sustainable success in the face of industry shortages
  2. Embracing future electrification with a customer-first approach
  3. Exploring new conquest opportunities across portfolios

1. Develop Sustainable Success

While IHS Markit’s latest reports call for new light vehicle sales to grow by 3.7% in 2022, customer demand and new vehicle production are still expected to be dampened by ongoing chip shortages. However, as long as COVID-19 is kept reasonably in check by vaccines and apart from any major impacts from the Omicron variant, IHS Markit expects to see tentative demand recovery to continue across most regions.

As ongoing inventory challenges continue to fuel fierce competition for buyers, dealers need to focus on creating sustainable success by increasing profitability across the dealership, as well as cultivating their own homegrown inventory.

Homegrown Inventory

What is homegrown inventory?

Your homegrown inventory are vehicles that started as new sales, returned for regular service and maintenance, were eventually traded-in, reconditioned and later sold as a pre-owned vehicle.

This process not only supports a healthy, high-quality pre-owned vehicle inventory, it also offers dealers numerous opportunities to drive profitability throughout the vehicle’s lifecycle, starting with that first new vehicle sale. 

This kind of strategy is ultimately dependent on delivering an exceptional customer experience – both online and in-person – to engage prospective customers and to keep them coming back after that initial sale. To support your dealership’s homegrown strategy, take a data-driven approach and personalize the customer experience every step of the way, starting from their very first marketing touchpoint through behavior prediction technology.

Dealership Marketing Tools

Using dealership marketing tools powered by predictive analytics, dealers are empowered to set the tone for an exceptional customer experience by reaching customers at the right time and in the right format. These tools offer personalized messaging that inspires customers to take action before they even enter the buying journey. This benefits a dealer’s bottom line in numerous ways, starting with converting prospects more efficiently at a higher ROI.

Applying this approach to maintaining communication with customers after that initial sale also enables dealers to build life-long loyalty. Those who service their vehicle at the dealership are more than 2.5x more likely to purchase their subsequent vehicle from that same retailer vs. those who did not.

2. Embrace Future Electrification

Many dealers are starting to realize the automotive industry’s “electric future” has already arrived. According to IHS Markit, consumer adoption reached new heights by 2020 as EV loyalty rates climbed to 55%, growing from only 34% five years ago.

As consumer adoption grows, EV market share has doubled in the last two years. Looking at just the U.S., IHS Markit forecasts sales of electric and hybrid vehicles are expected to exceed 3.5% overall market share in 2021 and climb to a more than 10% share by 2025. This kind of incredible growth is expected to continue both in the short and long term. By 2030, IHS Markit forecasts one in four new passenger car sales will be fully electric.

From sales to service work, dealerships will be critical to electrification on a mass scale, says NADA President and CEO Mike Stanton. In a 2021 blog post, Stanton noted dealers’ attitudes toward selling and servicing EVs has changed considerably in recent years, using Cadillac as a real-world example of dealerships embracing change.

Dealerships will be critical to widespread electrification, explains Stanton, offering “a large, expansive network of retailers and service providers who are experts at marketing locally and who are invested in the future sales and service opportunities that these products promise.”


Download the Whitepaper:
4 Ways for Dealers to Embrace an Electric Future


It’s important dealers assess how their online and in-person sales experience will need to evolve alongside changing buying behaviors and consumer needs. This includes updates to your showroom, such as displaying your EV portfolio or available charging solutions, ensuring online vehicle descriptions speak to relevant selling points or offering online vehicle configuration options.

Remember: Investing in new technologies that provide value to EV buyers early in their buying journey helps build trust from the start, setting the stage for an excellent customer experience – and customer loyalty

3. Explore New Conquest Opportunities

As inventory challenges linger on, customer brand loyalty has diminished, reaching a five-year low in August 2021. According to IHS Markit, as the auto industry’s SAAR plummeted from 18.5 in April to 12.2 in September 2021, brand loyalty followed with a correlation coefficient of .79.

This diminishing brand loyalty is presenting new and future opportunities to dealers to conquest customers who possibly wouldn’t have shopped their brand or rooftop in the past. But regardless of whether they’re from a rival brand, a customer who purchased from the same OEM a few towns over, or even your dealership’s service-not-sold portfolio, conquesting customers in today’s hyper-competitive market requires dealers to take a data-driven approach.


Get the Guide:
3 Tips to Grow Your Portfolio with Conquest Marketing


Data-Driven Approach 

Dealership marketing tools powered by predictive analytics efficiently and effectively analyze their entire local market to automatically identify their highest quality conquest opportunities. By utilizing behavior-predicting technology, dealers can eliminate the time-consuming task of weeding through leads by automatically analyzing data from their CRM, DMS and sales platform to identify prospects who will likely be ready to purchase soon.

These tools also empower dealers to make a great first impression by creating targeted messaging that taps into each prospective buyer’s unique wants and needs. By nurturing them through the buying journey dealerships can win these customers over from the competition. With this type of data-driven approach, dealers who leverage automotiveMastermind’s Market Conquest feature gain up to 15 incremental new conquest sales a month.

While dealerships’ “new normal” will likely continue to evolve throughout 2022 and beyond, dealers can still take control of their future success today by taking a proactive approach to their sales and marketing efforts.

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