Automotive Industry Outlook: The Biggest Challenges Dealerships Will Face in 2022

Dealerships are ramping up production, increasing vehicle sales, investing in electric vehicle production sites, and gearing up for the next phase of the auto industry. However, while dealerships are peeling out of the economic decline and heading down a new path of growth, they may not be in the clear just yet. Industry trends both new and old are reshaping the automotive industry outlook and throwing a wrench in many dealerships’ plans for growth in 2022. 

Some of the problems 2021 presented will continue to be a challenge for dealers in the foreseeable future, while new problems are also emerging to disrupt business models.

The biggest complications will likely not be confined to vehicle sales, but will instead affect every industry touchpoint, from supply chain and manufacturing to return service and maintenance. 

Here’s a look at what the industry can expect throughout 2022 and how dealerships can prepare.

3 Dealership Challenges to Plan For in 2022

  1. The unending inventory shortages

It seems as though every dealership and automotive industry outlook report from the last year and a half has discussed the semiconductor shortage. Unfortunately, dealerships will continue to hear more about it in the coming months.

According to automotive supply chain reports, inventory constraints are forecasted to extend through at least Q3 of 2022. Dealerships can expect lots to remain sparse for some time.

  1. Developing relationships with customers

A single vehicle sale has the potential to evolve into a lifelong relationship with a loyal brand advocate. However, relationship building opportunities are growing few and far between as dealerships are unable to reach consumers before they start shopping around.

According to research, 90 percent of drivers favor a virtual or digital purchasing experience over the current model. They crave a digital experience from initial research to signing papers. 

Gone are the days of walking from dealership to dealership to shop for a vehicle, going on multiple test drives with salespersons, and then sitting in a room to negotiate a price for hours on end. 

The industry is inching towards a seamless digital buying experience wherein drivers research the vehicle they want, take a virtual test drive, click add to cart, and then sign and pay from their laptopall without engaging or developing relationships with dealership personnel.

  1. Return service struggles

More than 40 percent of dealership revenue comes from service departments. Unfortunately, this revenue stream stands to experience interruptions in 2022.

Amidst the existing semiconductor shortage raising new vehicle prices and an industry-wide push toward electric vehicle production, more people will be holding on to their cars. Without a direct connection to the customer’s needs and their vehicle, dealerships will face difficulties in reaching consumers for return service.

Even worse, mechanics have entered the gig economy. Freelance technicians are providing services with the added comfort of anytime, anywhere maintenance. This form of repair employment is likely to increase throughout 2022, skimming off car owners who would overwise seek service at their local dealership.  

How Dealerships Can Stay Ahead

Dealerships can prepare for the challenges 2022 presents by prioritizing customer relationship building to increase loyalty and generate return service. 

Dealerships can accomplish this by embracing the technological shift, leveraging tools such as Elo GPS with CarRx that make it easy for dealers to maintain a direct connection to their customer’s vehicle and their service needs.

Elo GPS with CarRx is designed to help your customers assess their vehicle service needs, receive alerts from your business on service deals, and book service at your dealership directly from their phone. To learn more about Elo GPS with Car Rx and how it drives business back to your dealership, schedule a demo with our solution experts.