- Apr 16, 2009
- 108
- 59
- Awards
- 5
- First Name
- Eric
Automotive Prediction time again! Who could have predicted last year’s insanity?
A well-deserved shoutout goes out to everyone in the auto industry. Everyone did the impossible and worked hard to show the perseverance that the auto industry is known for. While 2020 is in the rear-view mirror, we have a long road ahead as we continue to adjust, grow and adapt to this new way of business — and life.
Adjusting and growing from last year is a consistent theme for any business, especially car dealers. The economy, politics, and the pandemic are still the elephants in the room, and that’s not going to change overnight.
So, what’s in store for this year? Let’s review some industry results, see how last year’s predictions fared, and make automotive marketing predictions for 2021. And, as always, several automotive professionals share their 2021 predictions as well.
2020 retail automotive sales results for new vehicles fell 14.6%, for a total of 14.5 million units. This is the lowest sales volume since 2012. These results were considerably better than the initial SAAR (Seasonally Adjusted Annual Rate) forecasts.
This is excellent news, given the dire estimates at the beginning of the year. Many dealerships were not financially prepared for the downturn, and for most, this is the first time they’ve experienced such a correction.
Due to manufacturer shutdowns, dealerships closing, and the impact on the supply chain, early expectations did not paint a pretty picture as sales dropped by 34% during the first six months of 2020.
Notably, the average price paid for a vehicle in 2020 jumped to another record level at over $38,000.
Industry Results – Based on Total Sales
2021 estimates call for 2.7 million CPO cars sold. Chevy, Ford, Honda, Nissan, and Toyota make up 45% of the total certified vehicles sold.
Top-selling vehicles of 2020
SUV sales grabbed 50% market share, up from 48% in 2019. Pick-up trucks closed out 2020 with approximately 20% market share, up from 18.1% in 2019. 2021 should see utility vehicles increase market share.
Estimates call for a bump to 52% of total US light-vehicle sales. The Pick-up truck market share is expected to remain at 20% this year. This could be bad news for dealerships that rely on steady car sales. This could also be an opportunity for dealerships to proactively add more used trucks and SUVs to their used car inventories.
Automotive marketing automation makes its mark: Nailed it!
It’s safe to say dealers have taken notice of the automation features available. However, this doesn’t necessarily mean they’re fully utilizing these productivity enhancements. There are still many improvement opportunities between Google Ads, segmented CRM follow-up campaigns, and a Create Once, Publish Everywhere (COPE) approach to marketing campaigns.
Voice search will influence dealership content marketing: Missed it!
As much as we all recognize that voice search is significant and will continue growing, just over 33% of the US population uses voice search. I don’t believe car shoppers will use it for anything more than locating a dealership, at least in the foreseeable future. (Seeing different data? Convince me. I want this to happen!)
Stand-alone SEO finally finds its niche: Nailed it!
2020 will also be known for its role in accelerating car dealers’ awareness of SEO within marketing circles. Momentum will continue to grow as dealers realize the value of organic traffic and its impact on marketing budgets.
Automotive conferences get shaken up: Nailed it!?
I knew a shake-up was imminent; I never specified the catalyst. Regardless, it changed. Suddenly, everyone had a webinar series, an interview series, or a podcast. Dealer Teamwork had two of those; I’m sure you participated in one way or another as well. Expect more format changes. The secret sauce this year will be creativity. Embrace the virtual format instead of cramming 100 pounds of traditional conference experience into a 5-pound virtual bag. Watch for vendors to be hesitant to invest, as many didn’t see value last year. Without it, online conferences won’t make an impact.
GMB raises the stakes: Nailed it!
Google My Business (GMB) started to make waves as many continued to downplay its growing importance. GMB management should be the first item on your digital marketing check-list if you haven’t crossed it off yet. And, if you haven’t realized it, GMB also stands for Get More Business! Get on this, now.
Carvana continues to grab market share: Nailed it!
Carvana plowed through last year and hit a record gross profit per unit of $4,056 in 2020, up 37% over the prior year’s GPU of $2,963 in Q3 2019. How? Trade-ins increased 128% and reduced inventory days on sale by 35%. Crazy prediction for 2021: Amazon buys Carvana.
Vendor consolidation will accelerate: Push!
Look for more consolidation among agencies, CRM companies, website platforms, and especially digital retailing companies this year as the rebuilding period continues. It may even accelerate as COVID continues to take its toll and revenue keeps drying up.
TikTok opens up more video opportunities: Nailed It!
Everyone laughed at this one last year. Car dealers and salespeople quickly flocked to this platform last year to gain more visibility. Watch for more ad solutions within the platform this year as well.
This is a big one, and I’ll double-down on it again for 2021. Automotive SEO helps dealers leverage their largest and best-performing traffic source more efficiently. Before 2020, many dealers struggled to find a place for organic search.
Dealers saw traffic still flowing to their sites once they either shut down or scaled paid media budgets back in 2020. Leads still came into their CRMs. But how? Dealers realized the benefits of organic traffic and started asking how they can get more. The fact remains that up to 80% of users click organic results and ignore paid search ads. Now is not the time to ignore the opportunities you’re missing from organic search. If this isn’t your largest traffic, it should be.
Most dealers get between 25% – 50%+ of their traffic from organic search without any additional optimization efforts. Plus, up to 50% of your organic traffic may already engage with your GMB profile. Dealers have historically spent most of their digital budget on a much smaller traffic source – paid search. Often those efforts have overweighted their traffic allocation and cannibalized organic traffic.
It’s time to reevaluate this approach. Stop leasing the traffic and build long-term SEO equity. Dealers won’t hesitate spending $6500/mo on paid search, yet they balk at the thought of $2000 on automotive SEO activities.
Paid search satisfies the need for immediate results. PPC is a sprint, while SEO is a marathon. I get it, nobody likes a marathon. It’s boring, long, and can be painful along the way.
Yet SEO equity is real, and it’s powerful. Plus, organic visitors often perform the most valuable conversions on your website. Build your organic momentum and SEO equity, and start preparing for that marathon.
What Dealers Need To Know About Automotive SEO in 2021
Delivering better user experiences (UX) has been a loud talking point on the conference scene over the last couple of years. Since solutions have been vague, and implementation has been slow, big tech has decided, once again, to step in with the needed solutions.
How? And, why is UX important?
Google has a set of rules that define how to improve website experiences; these are called Web Vitals. Google added new updates to its Core Web Vitals in mid-2020. These include Loading, Interactivity, and Visual Stability. Additional items go into effect in May 2021.
Google’s machines are smart enough to look at websites, understand what users are doing, and how well websites do the things they’re supposed to do. (And what they get wrong.)
So, what are those things? Google is asking basic questions such as
For those who enjoy geeky dev tools, there are several ways to measure Core Website Vitals elements. My personal favorite is the simplest. Download the Core Website Vitals Chrome extension to see how Google’s newest update grades your site.
An example of a detail Core Web Vitals looks to improve is how a web page loads. It looks for the items that load and how it impacts the user as the page layout shifts when new items are visible.
When a page loads, an image or CTA button may appear. You may have tried to click one of those items, and suddenly the page shifts. You either have to scroll back to the original target, or worse. You wound up clicking something else. Now you have to go back to the original page and start over again. This is called Cumulative Layout Shift, and Google wants to help website owners improve this experience.
Page layouts that shift create bad user experiences.
Technical SEO coverage should be an item included in quarterly website audits. More importantly, quality on-page optimization needs to be prioritized and added to your marketing mix in 2021.
Automotive SEO helps dealers prepare their sites so Google can find, index, and rank pages easier. This allows shoppers to find the most important pages faster within the search results. Dealers benefit from more quality traffic that converts and improves marketing ROI when balanced proportionally against other marketing channels.
I expect to see a couple of significant used car dealership acquisitions from large dealer groups. This is an easier way for groups to expand their footprint and insert successful used car dealership operations into their processes. Large groups appear anxious to build their online branded used car buying processes. Bigger footprints also help mitigate losses on the wrong inventory by managing vehicle locations. They may be chasing Carvana and Carmax experiences. Will it be enough? Can they match the investments already made by those competitors?
Large dealer groups such as Lithia had healthy used car sales during the pandemic. Pre-owned vehicle sales were up nearly 9% vs. 2019. Lithia is investing heavily in their new eCommerce program called Driveway due to consumer behavior changes. They plan to introduce the at-home car scheduling service within six regions by 2023.
I predict more used car dealership acquisitions will power large dealer growth.
Electric vehicle (EV) sales increased 9.9% in 2020. EV sales estimates for 2021 are approximately 600,000 for the US market.
Tesla sold 499,550 units globally in 2020. 180,575 of those were sold in the fourth quarter. The majority of those were Model 3 and Model Y models. (161,650). More production facilities in Austin, Germany, and Shanghai will push output to new levels. New models, lower prices, continuous updates, and a redesign to the Model X will fuel demand. And, don’t forget the Cybertruck.
EV competition will increase significantly in 2021. More model choices will satisfy the increased demand as more options are introduced. Fisker (yes, the old Karma), NIO, XPeng, and Lucid Motors will become more familiar names, among others. Lucid is anticipating building up to 400,000 units per year in their new Arizona factory.
Blue-chip brands such as Ford, GM, and foreign manufacturers, including VW, plan to invest up to $86 billion on new EV models over the next five years.
EV market sales volume is expected to grow to 6.9 million vehicles by 2025, compared to the estimated 1.4 million forecasted for 2020.
How Dealers Should Prepare
Dealers with EV inventory and those anticipating new EV models need to prepare for a massive change in shopper behavior. Competitively priced cars, high-end SUVs, and more pick-up trucks are on the way.
GM plans to invest more money in electric vehicle model development over the next five years than it will on gas and diesel vehicles. GM will introduce 30 EV models over the next five years at a $27 billion cost.
Ford’s Mach-E & EV pick-up trucks and GMC’s Hummer EV will kick-start the momentum. GM also has the Bolt, the Lyriq, and additional models earmarked for the Cadillac brands. I also anticipate GM to confirm the development of an electric Corvette SUV Crossover as well. I am eagerly awaiting announcements for an EV Corvette SUV and the elusive electric Z06 rumored to have 1000+ horsepower.
Sales of Mercedes-Benz xEV vehicles increased 229% globally as buyers embraced their plug-in hybrids and all-electric models. Mercedes sold more than 87,000 units in the fourth quarter. BMW sold nearly 193,000 fully electric and plug-in hybrid electrified vehicles globally in 2020.
Clubhouse is hot and it looks like they’re just getting started. I’ll admit, my skepticism was initially high. I was fearful it would quickly devolve into a glorified pitchfest, drawing from the LinkedIn private message offenders.
What the heck is Clubhouse?
It’s a new social networking platform that strips away literally everything we’ve come to know and love (and even hate) about social media. Facebook takes our attention. The clubhouse can stream in the background. The creators, Paul Davison and Rohan Seth, built an audio-based social media app that’s brilliant in its simplicity. Recent data shows there are 2 million weekly active users on the platform.
We’ve become numb to the barrage of podcasts, webinars, virtual conferences, and traditional social media platforms. Clubhouse offers something drastically different as an audio-only platform. Twitter recently launched their audio feature, but it pales in comparison to Clubhouse.
I believe much of Clubhouse’s success stems from our desire to connect with people in different ways than we’ve been able to for the past year. Clubhouse offers a chance for more emotional connections as well as delivering truly personal or meaningful experiences.
Joining a room and participating with people you otherwise wouldn’t have the opportunity to engage with is a great experience. I’ve listened to various people such as Marc Andreeson, Kevin Hart, and Alexis Ohanian. (Andreeson’s VC firm helped finance the platform.)
I predict this will become a much larger platform for everyone, regardless of their industry. Automotive dealership staff, vendors, and consultants should consider the opportunities it offers. Many are using it as a new networking platform, others as a learning outlet or an opportunity to collaborate with their connections. I anticipate at least 25 million users by year-end. And, hopefully, nobody will acquire it too quickly. (Want an invite? Shoot me a message.)
Before you say, “What is this nonsense?” Hear me out. As decentralized finance and cryptocurrency become widely accepted by companies institutionally, blockchain applications will be considered for solutions within autonomous, connected, and electric vehicles.
How would automotive blockchains work, and what does it all mean?
A blockchain is just a database. Instead of being located in one place, it’s located in many places (a distributed network of computers). This decentralized network stores records, manages identities, and handles financial transactions faster and securely (no middleman like a bank)
Blockchain is best known for processing transactions to buy and sell cryptocurrency. I expect to see automotive manufacturers introduce these solutions that support connected car and EV ownership functions. Blockchain solutions can support charging station payments, insurance payments, and even vehicle finance payments.
Even ride-sharing companies could be affected by the introduction of improved car-sharing services due to the public’s diminished reliance on public transportation. Entire fleets of vehicles can manage personal data, location-based data, and financial transactions faster and more securely, all via blockchain. Of course, all of this depends on the pandemic’s length.
The automotive industry’s supply chain can also be improved using blockchain technology. Imagine if the companies that build, ship, and supply parts had access to the same supply chain data. This improves speed, affects costs, and removes the risk of imitation parts being added to the mix. Car dealers accessing this information would benefit from better inventory build data, parts availability, and improved vehicle delivery processes.
I predict we’ll see announcements of industry infrastructure applications using blockchain before we’ll have financial solutions, but both will happen this year. This will eventually lead to operational changes at the Tier 3 level.
Enough from me, let’s hear from some much smarter industry brains.
Overall, the auto retail business will be much like it was in 2020 — minus the shutdowns in early spring. Sales have rebounded and should continue throughout 2021, putting the industry in the range of hitting 16 million sales.
The higher-than-normal profit margins the industry has enjoyed the past six months likely will begin to recede later this year as OEM production normalizes. Nevertheless, margins will remain high as the majority of purchases continue to be in the more profitable SUV and truck lines.
The question for dealers will be whether they continue to exert operational discipline – especially in hiring practices. The working theory has been that more online sales require fewer people in the dealership. We saw that beginning in April — whether that continues later this year will be one of the trends to watch closely.
Electric Vehicles
The electric vehicle “tsunami” will soon be upon us. Not in 2021, but within the next three to four years. We’ll have a much better idea by 2024-2025 whether the new propulsion systems’ massive investment will pay off for automakers.
But dealers will begin seeing the impact this year in a more pronounced way. The big question is just how much of an impact. This year, several OEMs will become more aggressive in preparing their retail networks for the coming EV launches. This will include more focused dealership training programs this year that encourage (or force) their dealers to invest in facilities and separated EV franchises. This will become the norm over the next few years.
Mergers & Acquisitions
M&A continues to impact the auto retail industry. Last year used vehicles dominated the M&A headlines as consumer-facing platforms Vroom and Shift went public in 2020, trying to capture some of the recent magic engineered by Carvana on Wall Street.
The industry saw at least five acquisitions or investments in the 3rd and 4th quarters last year in the wholesale and dealer-to-dealer platform arena.
The growth of SPACs (special purpose acquisition company) for the purpose of taking companies public while avoiding the typical IPO (initial public offering) process could lead to more acquisitions in the next several months. SPACs (also known as blank check companies) raise money in the public markets for the purpose of making acquisitions. They have a two-year window in which to make acquisitions — otherwise, they have to return the capital to investors.
Two SPACs made acquisitions in the auto retail space last year —Shift and CarLotz (CarLotz should close in the next few weeks).
SPACs formed in the US last year are armed with more than $21 billion in capital and need to start spending. Already, numerous SPAC-led purchases of EV startups are in play. There will likely be more announcements this year in the auto retail space.
Dealer buy-sells will continue at an aggressive pace for the next several months. More than 100 rooftops changed owners in the fourth quarter last year. Valuations, which have never been higher — coupled with increasing costs in technology investments — are causing numerous owners to look for attractive exits.
Miscellaneous
Expect a couple of big announcements from new DMS player Tekion regarding dealership customers this year. The company will soon have certifications with the OEMs which will possibly bring a couple of big players to its fold.
Meanwhile, we’re watching Reynolds and Reynolds and CDK closely to see whether potential sales are in their short-term futures.
On the OEM side, the Peugeot FCA merger is imminent. Numerous analysts expect the Chrysler nameplate to disappear. We’ll see. One potential play could be Peugeot pushing vehicles through the Chrysler brand as it finally will have an open door in the U.S. market.
Dealerships will sell like crazy. Consolidation has been happening quietly over the past few years. As the changes of 2020 become more permanent, reluctant participants will simply walk away. Need evidence? Look at the Cadillac dealers who relinquished their franchises in 2020.
New Players
Traditional dealers will not be part of the dealership acquisitions. Although we’ve seen various investment funds start to gobble-up dealerships, the well-capitalized eCommerce players will begin to acquire dealerships to circumvent franchise laws. I don’t think anyone would consider the transition to online sales a runaway success (unless they’re cashing-in on technology). Seeing dealerships as the bottleneck, the Vrooms and Roadsters of the world will become dealerships through joint ventures and/or separate entities.
Inventory
Inventory will continue to be a crucial issue. Dealerships will use new and existing technology to match consumer desire to available inventory. Look for middleware and transportation entities to connect dealerships across the continent to make the most of available vehicles.
Advertising
Even more digital advertising to shift to parts and service. Realizing that supply still doesn’t meet demand, job security will be an even bigger issue. With OEM volume subsidies being unattainable, dealerships will shift focus to fixed-ops to drive traffic and revenue. Local search will finally rule the day, and spray-and-pray SEM strategies will decline. Used Lamborghini sales will also decrease as a result of agency owners hemorrhaging money.
Hail Mary Pass
EVs will be reclassified to support direct sales. Knowing that creating an entire dealership infrastructure is an enormous burden for small automotive producers, the new Biden administration, with its emphasis on renewable energy, will reduce the burdens of selling EVs in the US. This will be done to the point of meeting the minimum federal DOT regulations and having the means to accept the American dollar. The traditional OEMs will immediately follow suit. Write your senator because the OEMs already have. They also included a check.
Customers were ecstatic to see the changes 2020 created. Shorter wait times and seamless experiences due to appointment scheduling, remote pick-up/drop off, and turns to test-drive policies in various states will be expected going forward. Going to the customer more vs. the customer coming to the dealer will be a trend that continues and improves.
Local marketing emphasis.
Dealers will step-up their local SEO game-plan this year. It’s simple and local SEO is essential. Google has more great features in the pipeline to help attract more customers, improve accountability, and reporting. Shoppers in your local market want to connect with local businesses online, and dealers must be prepared to maximize those opportunities.
Tier 2’s marketing role will diminish.
Tier 2 marketing doesn’t make sense unless the marketing efforts drive quality traffic and deliver specific outcomes. The Tier 2 dynamic has changed and needs to move away from its old ways of delivering broad messages and find new ways of getting closer to the customer. The industry needs better ways to feature inventory (e.g., Ford’s new listing site) and take immediate action on a vehicle the way the customer prefers. I expect to see a new form of Tier 2 in the new year.
More personalization and customization of campaigns.
Advertising efforts will rely on more intelligent customer data to find and convert shoppers.
Thanks for reading another annual installment of automotive marketing predictions for 2021. If we can get through last year, we should be well-prepared for whatever craziness that lies ahead of us. We’re a resilient bunch of professionals, and nothing can stop our drive and initiative.
Please be safe, stay healthy and let’s do our best to help each other keep moving forward. Here’s to another successful year in the car business!
“If everything seems under control, you’re just not going fast enough.” -Mario Andretti.
Download our 2021 Automotive Success Playbook for more automotive marketing trends, insights & strategy recommendations.
A well-deserved shoutout goes out to everyone in the auto industry. Everyone did the impossible and worked hard to show the perseverance that the auto industry is known for. While 2020 is in the rear-view mirror, we have a long road ahead as we continue to adjust, grow and adapt to this new way of business — and life.
Adjusting and growing from last year is a consistent theme for any business, especially car dealers. The economy, politics, and the pandemic are still the elephants in the room, and that’s not going to change overnight.
So, what’s in store for this year? Let’s review some industry results, see how last year’s predictions fared, and make automotive marketing predictions for 2021. And, as always, several automotive professionals share their 2021 predictions as well.
2020 Automotive Industry Results
2020 retail automotive sales results for new vehicles fell 14.6%, for a total of 14.5 million units. This is the lowest sales volume since 2012. These results were considerably better than the initial SAAR (Seasonally Adjusted Annual Rate) forecasts.
This is excellent news, given the dire estimates at the beginning of the year. Many dealerships were not financially prepared for the downturn, and for most, this is the first time they’ve experienced such a correction.
Due to manufacturer shutdowns, dealerships closing, and the impact on the supply chain, early expectations did not paint a pretty picture as sales dropped by 34% during the first six months of 2020.
Notably, the average price paid for a vehicle in 2020 jumped to another record level at over $38,000.
Industry Results – Based on Total Sales
- Ford – down 15.6%
- FCA – down 17.4%
- GM – down 11.9%
- Honda – down 16.3%
- Hyundai – down 10%
- Nissan – down 33.2%
- Subaru – down 12.6%
- Toyota – down 11.4%
- Volkswagen – down 12.8%
- Volvo (up 1.8%)
- Mazda (up 0.2%)
- Tesla (up 20.3%)
2021 estimates call for 2.7 million CPO cars sold. Chevy, Ford, Honda, Nissan, and Toyota make up 45% of the total certified vehicles sold.
Top-selling vehicles of 2020
SUV sales grabbed 50% market share, up from 48% in 2019. Pick-up trucks closed out 2020 with approximately 20% market share, up from 18.1% in 2019. 2021 should see utility vehicles increase market share.
Estimates call for a bump to 52% of total US light-vehicle sales. The Pick-up truck market share is expected to remain at 20% this year. This could be bad news for dealerships that rely on steady car sales. This could also be an opportunity for dealerships to proactively add more used trucks and SUVs to their used car inventories.
- Ford’s F-Series, the truck leader – 787,422 sales, down 12.2%
- GM’s Silverado – 586,675 units, up 3.2%
- FCA’s Ram – 563,676 units, down 11%
- Toyota’s RAV4, the SUV leader four years running – 430,387 units, down 3.9%
- Toyota’s Camry, the #1 car 19 years running, 294,348 sales, down 12.7%
- More 2020 sales data
- Average new vehicle financing amount: $35,373, up from $33,525 last year
- Average new vehicle down payment: $4,734, up from $4,329 last year
- Average monthly payment: $581/mo, up from $570 last year
- Average used vehicle financing amount: $24,406 up from $22,611 last year
- Average used vehicle down payment: $3,283 up from $2,690 last year
- Average monthly payment: $437/mo, up from $415 last year
Last Year’s Automotive Predictions
Automotive marketing automation makes its mark: Nailed it!
It’s safe to say dealers have taken notice of the automation features available. However, this doesn’t necessarily mean they’re fully utilizing these productivity enhancements. There are still many improvement opportunities between Google Ads, segmented CRM follow-up campaigns, and a Create Once, Publish Everywhere (COPE) approach to marketing campaigns.
Voice search will influence dealership content marketing: Missed it!
As much as we all recognize that voice search is significant and will continue growing, just over 33% of the US population uses voice search. I don’t believe car shoppers will use it for anything more than locating a dealership, at least in the foreseeable future. (Seeing different data? Convince me. I want this to happen!)
Stand-alone SEO finally finds its niche: Nailed it!
2020 will also be known for its role in accelerating car dealers’ awareness of SEO within marketing circles. Momentum will continue to grow as dealers realize the value of organic traffic and its impact on marketing budgets.
Automotive conferences get shaken up: Nailed it!?
I knew a shake-up was imminent; I never specified the catalyst. Regardless, it changed. Suddenly, everyone had a webinar series, an interview series, or a podcast. Dealer Teamwork had two of those; I’m sure you participated in one way or another as well. Expect more format changes. The secret sauce this year will be creativity. Embrace the virtual format instead of cramming 100 pounds of traditional conference experience into a 5-pound virtual bag. Watch for vendors to be hesitant to invest, as many didn’t see value last year. Without it, online conferences won’t make an impact.
GMB raises the stakes: Nailed it!
Google My Business (GMB) started to make waves as many continued to downplay its growing importance. GMB management should be the first item on your digital marketing check-list if you haven’t crossed it off yet. And, if you haven’t realized it, GMB also stands for Get More Business! Get on this, now.
Carvana continues to grab market share: Nailed it!
Carvana plowed through last year and hit a record gross profit per unit of $4,056 in 2020, up 37% over the prior year’s GPU of $2,963 in Q3 2019. How? Trade-ins increased 128% and reduced inventory days on sale by 35%. Crazy prediction for 2021: Amazon buys Carvana.
Vendor consolidation will accelerate: Push!
Look for more consolidation among agencies, CRM companies, website platforms, and especially digital retailing companies this year as the rebuilding period continues. It may even accelerate as COVID continues to take its toll and revenue keeps drying up.
TikTok opens up more video opportunities: Nailed It!
Everyone laughed at this one last year. Car dealers and salespeople quickly flocked to this platform last year to gain more visibility. Watch for more ad solutions within the platform this year as well.
5 Automotive Industry Predictions For 2021
Search Engine Optimization (SEO) Will Continue To Explode
This is a big one, and I’ll double-down on it again for 2021. Automotive SEO helps dealers leverage their largest and best-performing traffic source more efficiently. Before 2020, many dealers struggled to find a place for organic search.
Dealers saw traffic still flowing to their sites once they either shut down or scaled paid media budgets back in 2020. Leads still came into their CRMs. But how? Dealers realized the benefits of organic traffic and started asking how they can get more. The fact remains that up to 80% of users click organic results and ignore paid search ads. Now is not the time to ignore the opportunities you’re missing from organic search. If this isn’t your largest traffic, it should be.
Most dealers get between 25% – 50%+ of their traffic from organic search without any additional optimization efforts. Plus, up to 50% of your organic traffic may already engage with your GMB profile. Dealers have historically spent most of their digital budget on a much smaller traffic source – paid search. Often those efforts have overweighted their traffic allocation and cannibalized organic traffic.
It’s time to reevaluate this approach. Stop leasing the traffic and build long-term SEO equity. Dealers won’t hesitate spending $6500/mo on paid search, yet they balk at the thought of $2000 on automotive SEO activities.
Paid search satisfies the need for immediate results. PPC is a sprint, while SEO is a marathon. I get it, nobody likes a marathon. It’s boring, long, and can be painful along the way.
Yet SEO equity is real, and it’s powerful. Plus, organic visitors often perform the most valuable conversions on your website. Build your organic momentum and SEO equity, and start preparing for that marathon.
What Dealers Need To Know About Automotive SEO in 2021
Delivering better user experiences (UX) has been a loud talking point on the conference scene over the last couple of years. Since solutions have been vague, and implementation has been slow, big tech has decided, once again, to step in with the needed solutions.
How? And, why is UX important?
Google has a set of rules that define how to improve website experiences; these are called Web Vitals. Google added new updates to its Core Web Vitals in mid-2020. These include Loading, Interactivity, and Visual Stability. Additional items go into effect in May 2021.
Google’s machines are smart enough to look at websites, understand what users are doing, and how well websites do the things they’re supposed to do. (And what they get wrong.)
So, what are those things? Google is asking basic questions such as
- Is it happening? Did the navigation start successfully? Has the server responded?
- Is it useful? Has enough content rendered that users can engage with it?
- Is it usable? Can users interact with the page, or is it busy?
- Is it delightful? Are the interactions smooth and natural, free of lag and jank?
- Perceived load speed: how quickly a page can load and render all of its visual elements to the screen.
- Load responsiveness: how fast a page can load and execute any required JavaScript code for components to respond quickly to user interaction
- Runtime responsiveness: after page load, how quickly can the page respond to user interaction.
- Visual stability: do elements on the page shift in ways that users don’t expect and potentially interfere with their interactions?
- Smoothness: do transitions and animations render at a consistent frame rate and flow fluidly from one state to the next?
For those who enjoy geeky dev tools, there are several ways to measure Core Website Vitals elements. My personal favorite is the simplest. Download the Core Website Vitals Chrome extension to see how Google’s newest update grades your site.
An example of a detail Core Web Vitals looks to improve is how a web page loads. It looks for the items that load and how it impacts the user as the page layout shifts when new items are visible.
When a page loads, an image or CTA button may appear. You may have tried to click one of those items, and suddenly the page shifts. You either have to scroll back to the original target, or worse. You wound up clicking something else. Now you have to go back to the original page and start over again. This is called Cumulative Layout Shift, and Google wants to help website owners improve this experience.
Page layouts that shift create bad user experiences.
Technical SEO coverage should be an item included in quarterly website audits. More importantly, quality on-page optimization needs to be prioritized and added to your marketing mix in 2021.
Automotive SEO helps dealers prepare their sites so Google can find, index, and rank pages easier. This allows shoppers to find the most important pages faster within the search results. Dealers benefit from more quality traffic that converts and improves marketing ROI when balanced proportionally against other marketing channels.
Used Car Dealers Will Be Prime Acquisition Targets.
I expect to see a couple of significant used car dealership acquisitions from large dealer groups. This is an easier way for groups to expand their footprint and insert successful used car dealership operations into their processes. Large groups appear anxious to build their online branded used car buying processes. Bigger footprints also help mitigate losses on the wrong inventory by managing vehicle locations. They may be chasing Carvana and Carmax experiences. Will it be enough? Can they match the investments already made by those competitors?
Large dealer groups such as Lithia had healthy used car sales during the pandemic. Pre-owned vehicle sales were up nearly 9% vs. 2019. Lithia is investing heavily in their new eCommerce program called Driveway due to consumer behavior changes. They plan to introduce the at-home car scheduling service within six regions by 2023.
I predict more used car dealership acquisitions will power large dealer growth.
Electric Vehicles Will Breakout & Disrupt
Electric vehicle (EV) sales increased 9.9% in 2020. EV sales estimates for 2021 are approximately 600,000 for the US market.
Tesla sold 499,550 units globally in 2020. 180,575 of those were sold in the fourth quarter. The majority of those were Model 3 and Model Y models. (161,650). More production facilities in Austin, Germany, and Shanghai will push output to new levels. New models, lower prices, continuous updates, and a redesign to the Model X will fuel demand. And, don’t forget the Cybertruck.
EV competition will increase significantly in 2021. More model choices will satisfy the increased demand as more options are introduced. Fisker (yes, the old Karma), NIO, XPeng, and Lucid Motors will become more familiar names, among others. Lucid is anticipating building up to 400,000 units per year in their new Arizona factory.
Blue-chip brands such as Ford, GM, and foreign manufacturers, including VW, plan to invest up to $86 billion on new EV models over the next five years.
EV market sales volume is expected to grow to 6.9 million vehicles by 2025, compared to the estimated 1.4 million forecasted for 2020.
How Dealers Should Prepare
Dealers with EV inventory and those anticipating new EV models need to prepare for a massive change in shopper behavior. Competitively priced cars, high-end SUVs, and more pick-up trucks are on the way.
GM plans to invest more money in electric vehicle model development over the next five years than it will on gas and diesel vehicles. GM will introduce 30 EV models over the next five years at a $27 billion cost.
Ford’s Mach-E & EV pick-up trucks and GMC’s Hummer EV will kick-start the momentum. GM also has the Bolt, the Lyriq, and additional models earmarked for the Cadillac brands. I also anticipate GM to confirm the development of an electric Corvette SUV Crossover as well. I am eagerly awaiting announcements for an EV Corvette SUV and the elusive electric Z06 rumored to have 1000+ horsepower.
Sales of Mercedes-Benz xEV vehicles increased 229% globally as buyers embraced their plug-in hybrids and all-electric models. Mercedes sold more than 87,000 units in the fourth quarter. BMW sold nearly 193,000 fully electric and plug-in hybrid electrified vehicles globally in 2020.
- Content marketing – Shoppers will have questions about these new models: performance, safety, prices, pre-orders, availability, (mostly) comparison research, and more. Your website should help solve these problems for customers.
- Audience Targeting – Customer data will play a larger role in defining the type of ads, the messaging, and channels used to connect and convert shoppers.
- Sales training – EV customers have different buying motivations. Dealership staff should recognize these personas and know how to satisfy their desire to be perceived as climate-conscious, savvy spenders, tech enthusiasts, and even early-adopter motorheads. As always, don’t be misled by stereotypes. Salespeople need to be attentive and nimble.
- Service departments – New service department processes, more comprehensive service technician experience and fewer parts. This will require significant changes for dealers as well.
Clubhouse Will Continue to Delight Users
Clubhouse is hot and it looks like they’re just getting started. I’ll admit, my skepticism was initially high. I was fearful it would quickly devolve into a glorified pitchfest, drawing from the LinkedIn private message offenders.
What the heck is Clubhouse?
It’s a new social networking platform that strips away literally everything we’ve come to know and love (and even hate) about social media. Facebook takes our attention. The clubhouse can stream in the background. The creators, Paul Davison and Rohan Seth, built an audio-based social media app that’s brilliant in its simplicity. Recent data shows there are 2 million weekly active users on the platform.
We’ve become numb to the barrage of podcasts, webinars, virtual conferences, and traditional social media platforms. Clubhouse offers something drastically different as an audio-only platform. Twitter recently launched their audio feature, but it pales in comparison to Clubhouse.
I believe much of Clubhouse’s success stems from our desire to connect with people in different ways than we’ve been able to for the past year. Clubhouse offers a chance for more emotional connections as well as delivering truly personal or meaningful experiences.
Joining a room and participating with people you otherwise wouldn’t have the opportunity to engage with is a great experience. I’ve listened to various people such as Marc Andreeson, Kevin Hart, and Alexis Ohanian. (Andreeson’s VC firm helped finance the platform.)
I predict this will become a much larger platform for everyone, regardless of their industry. Automotive dealership staff, vendors, and consultants should consider the opportunities it offers. Many are using it as a new networking platform, others as a learning outlet or an opportunity to collaborate with their connections. I anticipate at least 25 million users by year-end. And, hopefully, nobody will acquire it too quickly. (Want an invite? Shoot me a message.)
Automotive Blockchain Solutions Will Emerge
Before you say, “What is this nonsense?” Hear me out. As decentralized finance and cryptocurrency become widely accepted by companies institutionally, blockchain applications will be considered for solutions within autonomous, connected, and electric vehicles.
How would automotive blockchains work, and what does it all mean?
A blockchain is just a database. Instead of being located in one place, it’s located in many places (a distributed network of computers). This decentralized network stores records, manages identities, and handles financial transactions faster and securely (no middleman like a bank)
Blockchain is best known for processing transactions to buy and sell cryptocurrency. I expect to see automotive manufacturers introduce these solutions that support connected car and EV ownership functions. Blockchain solutions can support charging station payments, insurance payments, and even vehicle finance payments.
Even ride-sharing companies could be affected by the introduction of improved car-sharing services due to the public’s diminished reliance on public transportation. Entire fleets of vehicles can manage personal data, location-based data, and financial transactions faster and more securely, all via blockchain. Of course, all of this depends on the pandemic’s length.
The automotive industry’s supply chain can also be improved using blockchain technology. Imagine if the companies that build, ship, and supply parts had access to the same supply chain data. This improves speed, affects costs, and removes the risk of imitation parts being added to the mix. Car dealers accessing this information would benefit from better inventory build data, parts availability, and improved vehicle delivery processes.
I predict we’ll see announcements of industry infrastructure applications using blockchain before we’ll have financial solutions, but both will happen this year. This will eventually lead to operational changes at the Tier 3 level.
Enough from me, let’s hear from some much smarter industry brains.
Cliff Banks’ Automotive Predictions (President & COO, The Banks Report)
Overall, the auto retail business will be much like it was in 2020 — minus the shutdowns in early spring. Sales have rebounded and should continue throughout 2021, putting the industry in the range of hitting 16 million sales.The higher-than-normal profit margins the industry has enjoyed the past six months likely will begin to recede later this year as OEM production normalizes. Nevertheless, margins will remain high as the majority of purchases continue to be in the more profitable SUV and truck lines.
The question for dealers will be whether they continue to exert operational discipline – especially in hiring practices. The working theory has been that more online sales require fewer people in the dealership. We saw that beginning in April — whether that continues later this year will be one of the trends to watch closely.
Electric Vehicles
The electric vehicle “tsunami” will soon be upon us. Not in 2021, but within the next three to four years. We’ll have a much better idea by 2024-2025 whether the new propulsion systems’ massive investment will pay off for automakers.
But dealers will begin seeing the impact this year in a more pronounced way. The big question is just how much of an impact. This year, several OEMs will become more aggressive in preparing their retail networks for the coming EV launches. This will include more focused dealership training programs this year that encourage (or force) their dealers to invest in facilities and separated EV franchises. This will become the norm over the next few years.
Mergers & Acquisitions
M&A continues to impact the auto retail industry. Last year used vehicles dominated the M&A headlines as consumer-facing platforms Vroom and Shift went public in 2020, trying to capture some of the recent magic engineered by Carvana on Wall Street.
The industry saw at least five acquisitions or investments in the 3rd and 4th quarters last year in the wholesale and dealer-to-dealer platform arena.
The growth of SPACs (special purpose acquisition company) for the purpose of taking companies public while avoiding the typical IPO (initial public offering) process could lead to more acquisitions in the next several months. SPACs (also known as blank check companies) raise money in the public markets for the purpose of making acquisitions. They have a two-year window in which to make acquisitions — otherwise, they have to return the capital to investors.
Two SPACs made acquisitions in the auto retail space last year —Shift and CarLotz (CarLotz should close in the next few weeks).
SPACs formed in the US last year are armed with more than $21 billion in capital and need to start spending. Already, numerous SPAC-led purchases of EV startups are in play. There will likely be more announcements this year in the auto retail space.
Dealer buy-sells will continue at an aggressive pace for the next several months. More than 100 rooftops changed owners in the fourth quarter last year. Valuations, which have never been higher — coupled with increasing costs in technology investments — are causing numerous owners to look for attractive exits.
Miscellaneous
Expect a couple of big announcements from new DMS player Tekion regarding dealership customers this year. The company will soon have certifications with the OEMs which will possibly bring a couple of big players to its fold.
Meanwhile, we’re watching Reynolds and Reynolds and CDK closely to see whether potential sales are in their short-term futures.
On the OEM side, the Peugeot FCA merger is imminent. Numerous analysts expect the Chrysler nameplate to disappear. We’ll see. One potential play could be Peugeot pushing vehicles through the Chrysler brand as it finally will have an open door in the U.S. market.
James Klaus’ Automotive Predictions (Chief Sales Officer, Dealer Teamwork)
OEM digital marketing program adoption will improve. Tier 3 activity levels will be maximized more than ever due to a new level of data quality and accountability processes. I anticipate the manufacturers will increase their advertising efforts as dealers continue to spend less because of lower inventory levels in the first two quarters of 2021.Bill Playford’s Automotive Predictions (VP & Partner, DealerKnows)
ConsolidationDealerships will sell like crazy. Consolidation has been happening quietly over the past few years. As the changes of 2020 become more permanent, reluctant participants will simply walk away. Need evidence? Look at the Cadillac dealers who relinquished their franchises in 2020.
New Players
Traditional dealers will not be part of the dealership acquisitions. Although we’ve seen various investment funds start to gobble-up dealerships, the well-capitalized eCommerce players will begin to acquire dealerships to circumvent franchise laws. I don’t think anyone would consider the transition to online sales a runaway success (unless they’re cashing-in on technology). Seeing dealerships as the bottleneck, the Vrooms and Roadsters of the world will become dealerships through joint ventures and/or separate entities.
Inventory
Inventory will continue to be a crucial issue. Dealerships will use new and existing technology to match consumer desire to available inventory. Look for middleware and transportation entities to connect dealerships across the continent to make the most of available vehicles.
Advertising
Even more digital advertising to shift to parts and service. Realizing that supply still doesn’t meet demand, job security will be an even bigger issue. With OEM volume subsidies being unattainable, dealerships will shift focus to fixed-ops to drive traffic and revenue. Local search will finally rule the day, and spray-and-pray SEM strategies will decline. Used Lamborghini sales will also decrease as a result of agency owners hemorrhaging money.
Hail Mary Pass
EVs will be reclassified to support direct sales. Knowing that creating an entire dealership infrastructure is an enormous burden for small automotive producers, the new Biden administration, with its emphasis on renewable energy, will reduce the burdens of selling EVs in the US. This will be done to the point of meeting the minimum federal DOT regulations and having the means to accept the American dollar. The traditional OEMs will immediately follow suit. Write your senator because the OEMs already have. They also included a check.
Sean Stapleton’s Automotive Predictions (CEO & Co-Founder, Dealer Teamwork)
Appointment based cultures & experiences/less time in the showrooms.Customers were ecstatic to see the changes 2020 created. Shorter wait times and seamless experiences due to appointment scheduling, remote pick-up/drop off, and turns to test-drive policies in various states will be expected going forward. Going to the customer more vs. the customer coming to the dealer will be a trend that continues and improves.
Local marketing emphasis.
Dealers will step-up their local SEO game-plan this year. It’s simple and local SEO is essential. Google has more great features in the pipeline to help attract more customers, improve accountability, and reporting. Shoppers in your local market want to connect with local businesses online, and dealers must be prepared to maximize those opportunities.
Tier 2’s marketing role will diminish.
Tier 2 marketing doesn’t make sense unless the marketing efforts drive quality traffic and deliver specific outcomes. The Tier 2 dynamic has changed and needs to move away from its old ways of delivering broad messages and find new ways of getting closer to the customer. The industry needs better ways to feature inventory (e.g., Ford’s new listing site) and take immediate action on a vehicle the way the customer prefers. I expect to see a new form of Tier 2 in the new year.
More personalization and customization of campaigns.
Advertising efforts will rely on more intelligent customer data to find and convert shoppers.
Thanks for reading another annual installment of automotive marketing predictions for 2021. If we can get through last year, we should be well-prepared for whatever craziness that lies ahead of us. We’re a resilient bunch of professionals, and nothing can stop our drive and initiative.
Please be safe, stay healthy and let’s do our best to help each other keep moving forward. Here’s to another successful year in the car business!
“If everything seems under control, you’re just not going fast enough.” -Mario Andretti.
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