The global pandemic has caused a crisis in the automotive dealership industry. They have fewer and fewer new vehicles to sell. Now the industry is facing a disaster of epic proportions. There’s no other way to describe it other than it faces a critical car shortage. Unfortunately, this is not an exaggeration.
How the Car Shortages Affect Automotive Dealerships
The car shortage will take years to resolve, thanks to the pandemic, which created a supply chain problem that led to a shortage of semiconductor chips. With fewer new vehicles coming off the assembly line, the situation has forced buyers to switch to used vehicles.
Now there’s a massive lack of inventory for both new and pre-owned cars. The problem is so severe that more than 100,000 cars were cut from North American production according to CNET. Globally, the number is 180,000.
This number doesn’t include the 1.06 million vehicles cut from the production schedules of American factories per AutoForecast Solutions data referenced in the CNET story. The agency expects the number to reach almost 4 million by the end of the year. Clearly, North America is taking the biggest hit.
Not only are there fewer new vehicles being produced but also, they have fewer features. For example, General Motors had to forgo heated seats and steering wheels due to the chip shortage. Unfortunately for General Motors, they’ve seen their sales fall by 40% post-pandemic when compared to 2019 as explained in an article from TellMeBest.
Another auto company saw its sales drop by 27% post-pandemic when compared to pre-pandemic days. For the same time frame, Ford saw theirs tumble by 33%.
Considering the dangerously low levels of vehicle inventory, it’s no surprise that the price of vehicles skyrocketed by at least 30% over pre-pandemic prices. The low inventory isn’t the only cause of the soaring prices. Inflation, increased consumer demand, and supply scarcity all had a part in it.
The Dire Consequences of the Car Shortage
That’s not the end of the domino effect on the automotive industry. For every vehicle that doesn’t come off the assembly, it puts jobs at risk. The impact is unfathomable. It’s forcing carmakers to cut shifts or worse … shut down assembly lines. Some countries may find themselves in a recession due to the car shortage.
Semiconductors aren’t the only thing in short supply. Plastics used in storing windshield wiper fluid and the dashboard mold are also hard to find. The industry also struggles to find the foam for seats.
It all started with the shortage of semiconductors. The CNET article says it’s unlikely the chip shortage will go away before 2023. It may go beyond 2023.
What does this mean for automotive dealerships? They will have a hard time filling up their lots. The empty space won’t be good for business because it sends a message to the public — regardless of if it’s true or not — that the business isn’t doing well. Some may go to another dealership.
What can automotive dealerships do while the industry waits for the supply chain to right itself? Pivot your business to grow another part of it. If you do this, you could also improve customer service. Here are two ways you can do this.
1. Add Service Lanes
Despite the shortage of cars, there are still a whole lot of vehicles out there. They still need servicing. Add or grow your service center. Customers are 86 times more likely to buy their next car from the dealership that does their maintenance and servicing per J&L Marketing.
If your dealership hasn’t already, invest in dealership technology solutions that can improve the customer service experience to increase the chances of service lane success. This helps your service department operate more effectively from the time the customer calls or comes into the dealership all the way through vehicle pick-up and beyond.
Service lane automation allows you to track the entire process with tablets and other mobile devices. Service technicians can have the latest information at their fingertips when the customer follows up. The tool makes it a breeze to update the customer’s vehicle status as well as add photos.
The technology can automatically send updates to customers using their preferred communication method. They’ll appreciate the dealership for communicating regularly and being proactive. This automation takes a load off the staff as they would not need to follow up with the customer with updates. And customers won’t have to wonder what’s going on with their vehicle and call to find out.
The key to service lane automation and customer service is to create a seamless process and workflow from vehicle drop-off to pick-up. The goal is to proactively send updates to customers, shorten wait times, and automate service reminders to encourage customers to schedule vehicle maintenance. The technology can automate the process of scheduling appointments online or through a mobile app. Again, this is another step that doesn’t take up the overloaded staff’s time.
It’s tough to find qualified techs at a time when there is also a shortage of them. Service lane technology will let them focus on what they do best without wasting their time with all the staff that can be automated.
As you grow your service lanes, you might want to consider adding or increasing services. Alignments, for example, are one of the highest margin services you can offer. Does your dealership do inspections? These can create opportunities to do alignments.
What about tire and wheel services? Many customers tend to have their first interaction with a dealership through tire and wheel services. Make the most of this opportunity to turn them into repeat customers. The service lane technology will help you deliver the best customer service.
Did you know that Advanced Driver Assistance Systems (ADAS) is a huge growing market? It’s expected to grow by $19 billion between 2021 and 2025 with a CAGR of about 8% as reported by Technavio Research. This means the market for ADAS parts and equipment will multiply and create more opportunities for your dealership’s customer service technicians.
2. Invest in a Service Lane Kit
Dealerships pay thousands of dollars in repair or medical bills thanks to personal injury and false claims, even if the dealership is not at fault. It’s very hard to win these types of claims without evidence. Without proof, your automotive dealership could have to do the repairs to make it right.
As a result, it may cause insurance premiums to go up. You’re already paying for all the costs involved with a personal injury claim including expensive medical bills. The last thing you need is to pay a higher premium. You can help protect your dealership from these claims with ECAM’s service lane kit solution. It has helped a dealership avoid the cost of a personal injury claim in a slip and fall incident. That’s because the video recordings proved the customer was at fault.
The service lane kit came in handy for another dealership. A customer arrived at the dealership with a request to talk to the service manager. The customer claimed the dealership’s technicians had scratched, dented, and damaged their vehicle. Since the dealership partnered with Stealth, they contacted Stealth for help. The video analysts searched the service lane kit cameras and found what happened.
After conducting the video review, the analyst provided evidence that showed the customer’s vehicle arrived on the lot with the damage. The dealership shared the video with the customer and protected itself from the cost of a false claim.
The service lane kit (SLK) helps protect the dealership from expensive false claims. It’s bad enough you’re dealing with so many shortages and need to watch costs. With the SLK, dealers can not only avoid having to pay false claims, but they can also profit from fixing the damage as an additional service. You could also sidestep wasting techs’ time repairing damage from a false claim. This is a loss for the dealership
ECAM’s service lane kit contains high-definition IP cameras programmed with advanced analytics. These video surveillance cameras are placed in the service lanes and can capture the exterior of all cars that enter and exit the service lane.
Every recording has time and date stamps. This speeds up any search for footage to follow up on claims made by customers. The videos also demonstrate your dealership’s dedication to safety and providing top customer service.
How Automotive Dealerships Benefit from Service Lane Kits
ECAM’s service lane kit includes installing cameras to capture all the different views. One camera sees the driver’s side, another sees the passenger side, and another on the ceiling can survey the hood, front, roof, and rear of the vehicle.
Altogether, the cameras produce 360-degree videos of every vehicle in the service lane. To optimize the videos, each camera can capture four to six images per second. The recordings are stored for at least 30 days.
As soon as a customer submits a claim, all you have to do is contact Stealth with the time and date of the vehicle arrived at the service lane. The video analysts can search the recordings and send the clip to you. You can share that with your customer, insurance company, and anyone else who needs to see it.
Service lane kits can do more than help protect dealerships from false claims. One of ECAM’s clients spent $20,000 a month to pay for customer claims. These customers reported the service center damaged their vehicles. The company received a return on their investment within weeks as the service lane kit costs far less than the $20K they were spending every month.
Stealth has worked with many automotive dealerships. In working with Stealth, you can have high-quality security cameras with trained monitoring operators and video analytics watching the entire lot including your service lane, showrooms, and repair bays.
To learn more about dealership security, pick up this guide to four auto dealership theft trends. Please contact us with your questions.
