Author: Annette Malave, SVP/Insights, RAB
Without a doubt, the auto industry has experienced unusual activity and profitability the past few years. Chip shortages created limited inventory for dealers, but as consumer demands increased, so did vehicle purchase costs.
According to a J.P. Morgan Research analysis, the average cost for a new vehicle was up over 6% versus 2021 and used cars were up over 42% (September 2022 versus February 2020). Despite these increased costs, auto dealers are concerned about 2023.
Results from Automotive News survey paint an interesting picture. In their survey of over 260 dealership executives, almost a third believe that business will be better in 2023 compared to 2022. Forty-five percent think that vehicle sales will also be better. Despite this optimism, 44% believe that their profit will be worse. Higher interest rates, a looming recession and concerns about vehicle affordability were the top three concerns.
Despite these concerns and obstacles, dealers see profit opportunities. While 34% see new vehicle sales as an opportunity, nearly just as many (31%) think service will be an area of for profit growth. With radio’s ability to reach four out of every 10 adults who have had their car serviced at a dealership per MRI-Simmons, it’s an opportunity for dealers.
As it pertains to the type of service, radio listeners who have gone to a car dealership for service are more likely to have:
- Alignment service/repair (27%)
- Paint job (17%)
- Tune-up (13%)
- Major engine repair (12%)
Among Black radio listeners, they are 44% more likely to have had an alignment service/repair and 32% more likely to have had brake lining or pad replacements. Hispanic radio listeners are 42% more likely to have had an alignment service/repair and 31% more likely to have had a major engine repair.
Based on survey responses, the profit opportunities for dealers lie in their service department, but it’s radio that can help drive and influence those opportunities. Why? Because radio works.