2020 has put a lot of industries on edge, the automotive industry included. Having experienced and recovered from many economic events over the years, dealers and the rest of the industry have had a ton of practice navigating these pitfalls. But reacting to these events on the fly can be troublesome and leave their operations vulnerable. What if there was a way to prepare ahead of time? The key to such insight is data.
Last year is a testament to how quickly trends can shift, and entire industries can be turned upside down. It’s no longer enough to just react to the immediate challenges. Instead, it is crucial to be proactive. This means identifying and preparing for potential obstacles and challenges before they occur. And while we can’t predict what the future looks like, we can stay close to the trends as they are forming and adjust accordingly.
Of course, this is easier said than done. Every economic event is unique, but there are certain occurrences that tend to happen during a crisis. Oftentimes, the unemployment rate increases, interest rates drop, and the housing market shifts, just to name a few. These events translate to changes in the auto industry as well.
For example, according to Experian’s Automotive Market Insights dashboard, an increase in unemployment correlates with decreased vehicle registrations. At the onset of the pandemic, the unemployment rate dramatically increased to nearly 14%, while vehicle registrations decreased from 1.1 million at the beginning of the year to around 660,000 in April. But digging a little deeper, the dashboard also shows that the peak of unemployment predates a decline in vehicle registrations by approximately one month. With the ability to see how certain events impact the automotive industry, dealers can plan ahead and make adjustments that can support their business during turbulent times.
Prepping for negative events is just one piece of the puzzle. Dealers must also find opportunity for growth during downturns. Identifying conquest opportunity is just one way dealers can expand their businesses. Knowing which consumers are coming off-lease, off-loan or are in positive equity in local surrounding areas can inform growth strategy and fuel sales. For instance, dealers may want to structure attractive lease and trade-in packages, ultimately helping to boost sales activity when it’s needed most.
While we may not be able to predict any economic downturn, we can do our best to prepare for them. Data provides crucial insights that can help dealers avoid more stress than necessary during challenging chapters. Market trends ebb and flow, even more so during times of crisis. Staying close to the data allows dealers to take control of their businesses during what feels like an out-of-control situation and see their businesses through to more stable times.