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Mar 21, 2012
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Happy New Year everyone!

I threw together this quick list of some 2022 predictions for retail automotive dealers. What are your thoughts and what else did I miss?


1) More Lenders Will Enter the Digital Retailing Space
Expect other lenders to jump on the bandwagon after Capital One managed to get their "DR" button installed across thousands of dealer websites.

2) More Dealers Will Cancel Digital Retailing Tools
If not obligated by an OEM mandate, expect dealers to cancel their covid-era digital retailing tools in droves. If they keep their DR tools, expect the majority of dealers to treat them as another lead form, not a transformational change in how they do business.

3) More OEMs Will Institute Digital Retailing Mandates
Following the likes of Nissan's CarSaver, GM's Shop Click Drive, Stellantis' E-Shop, Toyota SmartPath, etc.

4) Legacy Third-Party Marketplace Sites Will Release New Online Shopping Features
Carvana, Vroom, RocketAuto, fair, and others will continue to grow and pose a threat to the legacy third-party marketplace sites like AutoTrader, Cars.com, and CarGurus. Acquisitions like Cars.com’s CreditIQ will allow them to develop their own solution and help dealers fight back.

5) OEMs Will Continue the Trend Towards Direct to Consumer Sales
Franchise laws currently prohibit direct to consumer automobile sales, but expect manufacturers to skate around this by requiring customers to go to the OEM website to reserve and place orders for new models and EVs, with the dealer simply becoming a delivery center for these models.

6) Used Car Prices Will Reach All-Time High in Tax Season and Remain Elevated Through Q4
Expect another tax season on steroids with demand high, new car supply low, and inflation continuing. With less than 200K additional new cars predicted to be sold in 2022 over 2021, used car prices will remain elevated through Q4.

7) Midterm Blowout May Affect Future EV Adoption
With Republicans predicted to gain control of both the House and Senate, expect less investment on EV charging infrastructure and tax credits.

8) Dealership New Car Sales Staff Skills Will Deteriorate
With another year of low supply and high demand, many new car salespeople have transitioned to essentially being "order takers." Dealers should consider investing in training to keep sales staff in practice and ready for the supply rebound which will inevitably lead to a more competitive landscape again.

9) Dealer Variable Staff May Have Unrealistic Compensation Expectations
With another year of record grosses, variable staff may become accustomed to a certain elevated pay and lifestyle, especially those new to the industry. Dealers should temper expectations for this continuing long-term and help them prepare for the inevitable pay decrease to minimize turnover.

10) Used Cars Will Get Older, So Will Technicians
It seems like common sense, but used cars are going to get older which means they will stay on the road longer with limited new cars to replace them. This means they will need more maintenance and repairs, however, most dealerships are already struggling with a technician shortage and many are at capacity. Dealers will need to focus on retaining, cultivating, and attracting technicians. The catch-22 to keep in the back of your mind is as EV adoption increases, the maintenance and repair needs of the average car will decrease - but this is 2030’s problem to deal with. :)

11) Dealers May Remain Dark on Google Ads New Car Advertising Long Term
With new car inventory remaining light and new vehicle keyword CPC’s remaining high, expect dealers to stay dark on Google Ads, instead relying on tier 1 and 2 campaigns.

12) Google Vehicle Listing Ads Will See Widespread Adoption / Coercion
Google Vehicle Listing Ads will be the hot new product for advertising agencies (and OEMs) to pitch in 2022. They are expected to come out of beta in Q1/Q2 and are currently producing great results. Be sure to jump on the bandwagon early, the longer you wait the less ROI there will be as CPC’s inevitably rise.

13) “New” Advertising Channels Will Emerge
With Pinterest and TikTok releasing vehicle catalog-based ad campaigns in 2022, expect agencies to begin pitching these additional advertising channels to dealers. Snapchat is another relative newcomer to the tier 3 space that will likely get grouped with Pinterest and TikTok advertising offerings.

14) Attribution Will Get Even Harder
With third-party cookies going away and the iOS 14 updates, expect sales attribution and campaign optimization to become more difficult.

15) More Dealer Groups Will Bring Marketing In-House
This has personally been a 10-year journey for me at Garber, now many other dealer groups are recognizing the benefits of bringing their marketing in-house. Companies like Contagious Auto are even helping dealers make the leap.

16) Look Out For Driveway (Lithia)
Lithia has been in the headlines for 2021 with their record acquisition streak which has enabled them to assemble a nationwide network of dealerships. Expect Lithia to remain in the headlines in 2022 for Driveway. Driveway is the full package with the trifecta of New Cars, Used Cars, AND Service that can take down Carvana if properly executed. What’s even better? By separating their traditional dealership and Driveway brands, Lithia has minimized the risk of cannibalizing their existing traditional customer base.

17) Voice Search (Still) Isn’t Going to Happen
Sorry, I don’t see this happening.

18) Ignore the NFT, Blockchain, Metaverse, etc Buzz in 2022
Much like voice search, NFTs, Blockchains, Metaverse, etc aren’t going to have a meaningful impact on tier 3 dealers in 2022 (or 2023 for that matter).

19) Personalized Marketing Will Grow
With advertising budgets decreased, dealers can no longer pray and spray their marketing message to everyone. Expect dealers to utilize technologies that target specific audiences or even on a 1-1 basis.

20) Lifetime Value of Customers Will Become King
The pandemic has made dealerships shift from a volume and sales objective mindset over to a lifetime value mindset. Dealers that look at the lifetime value of customers will thrive in 2022.

21) More Single Point Dealers Will Sell
With another year of record profits, expect single-point dealers and small groups without a succession plan to sell at an increasing pace while valuations are at all-time highs.

22) Covid is Here to Stay
You don't need a crystal ball for this one, covid is here to stay and will undoubtedly continue to affect dealerships and manufacturers in 2022.
 
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Jim K

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May 5, 2019
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Jim
@Ryan Everson you are a Marvel avenger and your super-power is Prediction. You touch on finance, marketplaces, DR, attribution, competition +++

I've been following Intuit's purchase of MailChimp for $5.7 billion. That lead me to Credit Karma that Intuit purchased last December for $3.7 billion. It's all about access to buyers and their money. Credit Karma has about 100 million US users. And looksie here who they're partnering with to sell and finance cars: https://www.creditkarma.com/shop/autos. - Carvana, Truecar, Vroom and handful of lenders. Insurance and other loans too. Makes sense and great strategy, but even more for dealers to worry about. :(
 
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Jun 16, 2021
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Carol
Great insights! I love the thoughtfulness of speaking to the staff to keep realistic expectations. So important and appreciated.
 

Matthew Davis

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Mar 24, 2020
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Matthew
Fantastic post. Riffing on #21, the industry consolidation may start to have ramifications on the vendors in the space. You're either in the with big dawgs, or struggling to gain foothold. I've seen this play out previously in the media space as Sinclair Broadcasting, Nexstar, and others got massive.
 
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