Navigating Supply-Chain Issues and the Chip Shortage

The global microchip shortage has had a serious impact on the automotive industry over the past two years, and the pandemic's effect on supply chains has turned the scarcity of inventory into a bigger challenge than many expected. While there’s no definite timeline, analysts say the normal supplies of vehicles we’re used to aren’t likely to return until the end of 2022 or early 2023. 

To successfully navigate this rapidly changing and challenging landscape, dealerships need intelligent and creative long-term plans to keep sales and customer interest high. Here are some recommendations to help dealerships grow and succeed through 2022 and beyond.

Plan Ahead and Be Proactive

The chip shortage won’t end anytime soon, and even when it does, it will take time to build inventories to new-normal levels. Dealerships need to think ahead about inventory needs and potential marketing strategies  to extend customer reach. 

The first thing to keep in mind is this: When leads are low or inventory is scarce, it can seem as if the best move is to pull back on marketing efforts. However, the opposite is actually true; recent forecasts project dealerships will spend $9.4 billion on advertising and marketing in 2022, an increase of 8.8% compared with 2021.

Creativity Counts

There are creative ways for dealers to acquire new inventory. One easy option is to aggressively price and disclose older models to make way for the new ones. When you’re trying to sell used cars effectively and competitively, it’s also a good idea to be upfront and clear about any existing damage to each vehicle so shoppers know what to expect. 

There’s also data from Cars.com that shows close to 10% of recent auto buyers drove out of state for their purchase. Out of that group, almost 20% drove 50 miles (80 km) or more (13% even drove 150+ miles (240 km)). Consider this when you plan your marketing efforts and messaging; your target audience likely has expanded much further than you might think in the past two years. 

Embrace the Digital Space

Digital marketing platforms are powerful tools for dealerships that want to connect with customers. The effective use of targeted ads and social media campaigns may allow dealers to reach wider audiences. In fact, a recent study found nearly one in four auto buyers consider a dealership’s social media presence and content before buying a car. 

When it comes to digital platforms, especially social media, keep in mind that the old adage “content is king” is as true today as it ever was. Car shoppers love to see lots of images (28-35 photos are are the sweet spot for most vehicles) from multiple angles, and the higher the quality, the better. 

High-quality video is an effective  ool for dealerships because  t can make viewers feel like they’re in the driver’s seat or let them view specific features of the car that regular photos just don’t show as well. Videos perform especially well on social media. You can also embed them on your website and on third-party sites such as Cars.com and AutoTrader. Videos also can be hosted on YouTube to improve your site’s SEO ranking. 

Keep Up With Your Engagement

One of the often-overlooked results of the chip shortage is greater uncertainty among car buyers. That’s why it’s crucial for dealerships to stay engaged with their customers and keep them informed of current developments. This can be done through regular communication channels such as email newsletters, social media posts and consistently updating information on your site. Whatever method you choose, make sure it is consistent and engaging enough to keep customers coming back.

When shoppers ask questions or make comments on their recent purchases, especially when those queries are on social media, dealers should respond quickly to keep customers satisfied. And the numbers don’t lie: Recent research shows even a 1% decrease in a dealership’s overall customer retention can mean losing the equivalent of 90 vehicle sales. 

Ryan Matejka

The current chip shortage and vehicle inventory shortage may be around for a while, so it’s critical for dealerships to create a robust strategy to keep sales coming in. If you engage your audience regularly, you can keep interest high. In the end, this means more traffic to your site, more interest in your inventory and more deals closed on the lot. 

Ryan Matejka (above) is chief operating officer and co-founder of Redline, which provides dealership photography and marketing services for more than 1,000 dealerships nationwide.