2020 was an unprecedented year, and by the looks of it, 2021 is shaping up to be another one. Here are some things to keep an eye on as you guide your dealership through the troubled waters of the upcoming year.
What is the Economy Doing?
Sales through 2020 were bad, but they finished upwards of the most dire predictions. Car and Driver reports that the market finished sales at $14.5 million, which is a decline of 15%, making 2020 the worst year since 2012. Considering what we were facing, that’s almost an inspirational figure.
It is believed that these figures are partially due to the present downturn hitting different sectors of the economy differently. White collar workers have largely been able to shift to a work-from-home model, while many blue collar workers cannot. In addition, white collar spending is down, leaving them with more money in their pockets, which might be a cause of why vehicle down payments are actually up by 10% compared to the fourth quarter of 2019. This leaves the average down payment at $4734 with the average monthly payment a whopping $581. More on what they’re buying a little bit later.
2021 should see some recovery with a COVID-19 vaccine already being administered to several demographics. Estimates for how long it will take the entire population to get it vary widely, but the economy should improve as more people get it, with a sharp uptick when we’re close to maximum vaccination.
What is Everybody Buying?
The pandemic drove the specific types of demand. Because consumers were understandably wary of public transit, those who could afford to were in the market for a car.
While white collar workers were largely doing well under the circumstances, anxiety led to the favoring of used cars over new, a phenomenon we’ve discussed in this space in the past. This isn’t to say new cars weren’t moving. In fact, those same white collar workers who wanted new vehicles were quite willing to plunk down large amounts of money to get exactly the car they want. And that car is big. Large trucks and SUVs continue to be big sellers and if that’s not changing now, it will hold steady through 2021.
What’s Next for Electric and Autonomous Vehicles?
The AV/EV segment of the market is poised for innovation this year. Autonomous vehicles are still facing engineering challenges, with Apple expected to jump into the fray with its iCar. How well will it work? I have no idea, but I bet it’s going to look great.
On the EV front, demand has increased. Not just among single car drivers, but businesses with entire fleets are looking to transition. The environmental rollbacks of the Trump administration are likely to be reversed, and once again EVs will be the cost-effective and popular option.
The sticking point is between OEMs and dealerships. OEMs seem to want their EVs marketed in a future-facing manner, with specific and expensive requirements on showrooms. Dealers, understandably, believe they should be able to sell whatever their OEM makes without additional costs to them. I would hope this can be solved equitably, as more EVs on the road will benefit everyone.
All of this adds up to OEMs spending more on their AV/EVs, so be prepared.
The Shift Online
It won’t surprise anyone that the pandemic has made online shopping more popular than ever before. Even in industries that have historically been reluctant, like ours, more and more customers have wanted more of the process to take place in the digital realm.
The prospect of browsing through the inventory of a number of dealerships without the associated stress with going in is enormously appealing. The challenge for dealerships is meeting this demand and using it to generate solid leads. Right now, many lag behind, lacking the tools necessary to respond to this change in the market. DealerOn anticipated this trend, and we have several products including our game-changing APEX that are specifically designed for an increased reliance and desire for online retailing.
Keep these trends in mind as you move into 2021. The worst is hopefully behind us, but if 2020 taught us anything, it’s always a good idea to be prepared.