Dealers Scramble to Keep Up with Customer Demands

This is the sixth in a series of articles analyzing the results from the research that fuels this year’s Urban Science Dealership Transformation Index™ (DTI), which provides a snapshot of the relevance of the traditional dealership model to modern car buyers.

What a difference 12 months makes in the retail automotive world.

Just a year ago, demand for vehicles far outweighed supply, profits reached historic highs – along with record-high prices at some dealerships – and dealers were hungry for inventory.

Now retailers are left scrambling for tools to understand the reasons for leads lost, including to other dealerships; increase sales closing rates; and boost customer satisfaction. Yes, some manufacturers are replenishing dealer lots, but some vehicles remain in short supply and the mix of available models often fails to satisfy demand in some markets. In addition, used car and truck inventories remain low, as owners on average keep their vehicles for more than 12 years.

Dealers Report They Can’t Keep Up

The 2023 Dealership Transformation Index (DTI) survey conducted earlier this year by Urban Science with The Harris Poll found dealers are well aware of the need to keep up with evolving consumer and manufacturer demands. And an increasing number report they are struggling. Dealer respondents who are “very satisfied” with their ability to keep pace with changing auto buyer demand and preferences for vehicle types sunk 13 percentage points to 33% from 46% in 2022. Perhaps even more concerning is that fewer dealers are satisfied with their ability to generate quality traffic/leads, with that number dropping to 32% from 42% in 2022.

The majority of dealers (75%) are not fully satisfied with their ability to know a lead has defected. Slightly more than one in two (54% of dealers are only “somewhat satisfied” with their ability to track that information.

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Adds a general manager at a Honda store: “Oftentimes, customers shop around for a better quote or more features. This process can take time. Unfortunately, we are not in the know in real-time of customer intentions.”

Roadblocks to Dealers’ Success

Survey data shows that the vast majority – more than 90% in most cases  – of dealers want to know where they are losing sales, to have access to reports on daily industry sales to aid their own business analysis and to be able to tie data on their media spend to showroom sales.

As we noted in an earlier report, many factors caused 77% of 2023 dealer respondents – 17% more than in 2022 – to report “harder” future paths for growth. Changing tastes of auto buyers, including those of the all-important millennials, is one. Another is the growing competition from non-traditional car dealers such as CarMax and the industry’s increasing focus on battery-electric-vehicle sales. 

But the root cause of such missed sales and lost leads is a systemic product of the auto-buying public that now primarily includes four generations: baby boomers (ages 59-77), Gen X (ages 43-58), millennials (ages 27-42) and Gen Z (ages 11-26). Each of those groups has different preferences, communicates in different ways and sometimes has conflicting viewpoints about automobile dealerships.

Naturally, dealers, like other retailers, want to satisfy buyers of all age groups. But the millennial customer is key. Not only will they remain the primary buyer demographic for many years to come, they also are the group that is most likely to search for alternative ways to purchase new vehicles.

The Solution

Reclaiming leads and closing sales comes down largely to understanding why consumers prefer one dealership to another – and using near-real-time industry sales data, not delayed or obsolete registration data to monitor and analyze lead defections. Beyond that, dealers want to know what successful strategies and tools other dealers – both those representing their manufacturers as well as those selling competing brands – use to boost consumer confidence.

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Most dealers want their data-management tools to work together (88%) and for the tools to take appropriate action for them (78%). About half (54%) report spending too much time working with dealership management tools.

One notable finding: Dealers are almost evenly split between those saying they spend too much time with dealership management tools (49%) and those who don’t even bother to use most tools (46%).

Integrated, reliable software can speed dealers’ progress in tracking leads and closing sales by spotlighting reasons for defections and shortcomings at a dealership. As consumers more fully embrace technology as they move through the purchase funnel, so must dealers.

Urban Science: Our unrivaled near-real-time industry sales data, and consulting and technology offerings, have driven innovation, efficiency and profitability in every corner of the automotive industry. Our capabilities and industry expertise help OEMs and dealers and the advertising technology firms that support them, stay ahead of industry trends and achieve business certainty in