Category Archives: Auto Industry Updates

2021 auto trends on blue background

2021 Auto Trends

The events of 2020 could have never been predicted and impacted the automotive industry more than anyone could have realized. Auto sales dropped at alarming rates, manufacturing delays happened across Europe, and exports were disrupted for Chinese parts. However, the industry recovered remarkably well toward the end of the year, paving the way for auto trends going into 2021.

Dealerships continue to release online purchasing options, which helps launch the industry launch forward. Here are the most common auto trends to expect in 2021. 

Auto Trends to Watch in 2021

A Push for Ownership

In the past, ownership has dropped as ride-share options gained popularity. However, COVID-19 flipped the narrative. The pandemic reduced the need for countless people to commute, but many still rely on transportation for shorter, more frequent trips during the day. Ride-sharing companies suffered from a fear of the pandemic spreading, and cities saw residents make the shift from public transport and shared bikes and scooters to vehicle ownership. Even as businesses reopen, many have become accustomed to their new commuting alternative. The pandemic triggered growth in first-time car-buyers, and these numbers will continue to rise. 

Tighter Inventories

With the push to purchase vehicles comes another concern – supply. The demand for cars grew seemingly overnight, and many dealerships don’t have the mass inventories to keep up. Keeping a lean inventory works when the buyer gets the vehicle they want, but it becomes an issue when they can’t find their dream car with the right trim, color, and other preferences. 

The more expensive the vehicle costs, the lesser the inventory a dealership has on the lot. This is the case with pickup trucks and large SUVs – which are ironically driving vehicle sales. 

Go Big, and Bigger

The demand for pickup trucks and SUVs only increases year to year. Regardless of if someone is buying new or used, the need for large vehicles is unwavering.

The demand for large vehicles is good for manufacturers, and their profitability, although this trend is not without risks. Expensive SUVs and trucks dominate the industry, reaching an all-time high right before COVID-19 prevented many Americans from having the option to take public transportation. A lot of buyers began looking for affordable options for transportation. 

SUVs and large trucks increase the average selling price, which affects down payments and monthly payments – bringing affordability into question. With unemployment rates high and financial situations in dire conditions, auto manufacturers could be concerned. 

But what is happening is frequently the opposite. Americans purchasing vehicles during the pandemic qualify for the lowest promotional rates and feel secure in their finances to put down more money to get the car they want. Edmunds reported that the average down payment increased 10% from a year ago, increasing the average monthly payment to $581.

EV Growth

Tesla has competition. Elon Musk’s success has driven many automakers to follow in his footsteps, bringing EV innovation to the market, including startups and mainstream automakers. Electric vehicles will be in the spotlight. The transition to making more vehicles electric and eco-friendly piggyback on environmental laxity and clean air regulations. 

Not only that, but consumers are increasingly more trusting and comfortable with EVs. Manufacturers are producing models of all shapes and sizes to fit every lifestyle. 

2021 will see the production of new EV automakers like Fisker, Lucid, or Rivian. And even brands that have low visibility like Xpeng and Nio are seeing growth in sales. 

Now that EVs are becoming profitable, this segment in the industry is positioned to see growth and innovation this year. 

Digital Era

Because of COVID-19, the whole world witnessed a shift into all things digital. Remote work, video conferencing, online shopping, and telemedicine all saw massive jumps in popularity out of necessity. And if there is one thing auto manufacturers and analysts agree on, a more significant number of vehicle sales will be conducted online. 

This year will revolutionize the way vehicles are sold, purchased, and financed. Being able to see thousands of vehicles on your digital device without having to travel from dealership to dealership is appealing. Consumers can get the make, model, and trim options they want without leaving their couch. 

Car and truck sales mentality has also shifted to accommodate – if the consumer wants it, the dealers will have it. It’s not selling a car these days. It’s a consumer buying a car. Selling vehicles to meet quotas isn’t the modern way of operating a business during these times, and many companies realize this. Many manufacturers have launched a digital car-buying experience, such as Nissan@Home. 

Not only does purchasing online give the customer exactly what they want, but it allows the business to provide optimal customer service. 

New vs. Used

The constant battle between new or used vehicles will continue, and yet again, will be influenced by factors that affect pricing. When manufacturing shutdowns took a toll on the automaking industry last spring, used car sales took the lead. The used car market saw the advantage as a new demand arose – affordable transportation.

The shift away from public transportation to privately owned vehicles increased while the number of people replacing vehicles due to normal wear-and-tear decreased. Since many Americans have not been commuting and putting miles on their car, the number of trade-ins and used vehicles available have diminished. 

Financial worries and uncertainty also drove consumers to purchase more affordable, used vehicles instead of new vehicles with hefty price tags. These auto trends will continue well into 2021. 

What Happens When You Trade in Your Car to a Dealer?

If a customer is in the market to purchase a new or used vehicle, he probably has a car or truck that he wants to trade in. While he may have surfed the net and completed his search about what vehicle to buy, what dealers to consider, prices and other concerns, there are several important steps that he should take to maximize the trade in allowance that his dealer will give him. 

Steps to Trade In Your Car

While the customer may not need to purchase a Carfax report on his own vehicle, the dealer most probably will. The customer must be aware of any reported accidents or damage, as the dealer will want to use that data to justify a low appraisal value. In this regard, the customer must be realistic in his expectations. 

There are several things that the customer can and should do to maximize the appraisal price. He should google his own vehicle to see what dealers are asking for comparable vehicles. The appraisal value quoted will not be the retail asking prices he sees online; rather he will receive a wholesale price- one much closer to the auction prices that the dealer might pay at a used car auction. And, that number will be further reduced by any mechanical, body, or appearance work the vehicle needs. In this regard, the customer should have the vehicle as clean and shiny as possible. Make it easy for the appraiser to like the car or truck. Don’t give him any reason to knock the trade in value. 

The appraiser will also be looking at prices online, both retail prices asked by other dealers, and wholesale activity for similar models. Again, his final appraisal price will be reduced by any reconditioning that is needed. If the customer has repair orders proving that the vehicle has been well maintained, and that all needed repairs were done, this should support a more favorable valuation.

Fixing a value on the trade in is just as important as fixing the value on the vehicle to be purchased. Most customers spend too much time worrying about the price to be paid for the new vehicle, and not enough time justifying the highest possible trade appraisal. 

The dealer will want to know if the customer has the title to his vehicle. If not, the dealer will call the bank or finance company to ascertain the unpaid balance on the auto loan. Any amount still owing will be subtracted from the appraisal. If the lien payoff is greater than the appraisal value, the customer will need to pay the overage.

If the customer has a vehicle service contract or extended warrantyon his vehicle that has not expired, he can request a cancellation of the contract and obtain a pro rata refund. If 80% of the time or mileage has expired, he should receive a 20% refund of the price he paid years ago. This would help meet his required down payment. The fact that he had a service contract or extended warranty will give the appraiser some confidence that the vehicle should be free of any major problems. 

Is It Hard To Sell A Car Privately?

If the purchaser of a new or used vehicle has a trade-in, he must decide whether to sell it privately or trade it in to the new or used car dealer. While the majority of customers will decide, for several good reasons, to trade their vehicle in, there are a number of people who will opt to sell privately. The subject of trade-ins is a large and complicated one. This blog will address some of the difficulties to be expected in a private sale. The benefits of trading in the old vehicle are detailed in a blog entitled “Advantages of Trading In Your Car” at Trust Auto in Sykesville, MD.

In order to conduct a successful sale of his old vehicle, there are several things that should be handled. The first challenge to the private seller is to try to determine the market value of his current vehicle – what is a reasonable asking price? For this he must perform some diligent research, looking at similar vehicles listed at dealer websites and third-party searchers like Google or CarGurus.  From the average asking prices he must subtract what it will cost to fully recondition the vehicle, both mechanically and cosmetically. A professional detailing job will take about four hours and cost $150 or more. 

Next he will need to prepare a VDP, or vehicle detail page, a full description of every aspect of his vehicle. The more information that is provided the better. Help the prospective buyer to better visualize the car or truck. Several good photos of the inside and the outside will be needed. If the seller is going to find a buyer, he will need to place a classified ad with one or more of the classified automotive listing services such as Kelley Blue Book, Edmunds, TrueCar and many others. These services cost money, and a prime location that offers better visibility can be expensive. The objective is to help a buyer looking for a particular vehicle be able to find the sellers car or truck, click on that vehicle, read about it, see the photos, and be interested enough to call or email the seller for more information. If and when they do communicate, the buyer will ask all the usual questions that he would ask a dealer. And, he will need to be satisfied with the answers, to the point that he is willing to visit, inspect and drive the vehicle. 

If the vehicle passes the buyers inspection and he wants to buy it, the parties must agree on the price and how it will be paid. In almost all cases, the seller should require payment in cash or certified check. The seller should limit his future liability by selling the vehicle “As Is”, with no written representation about the condition of the vehicle. Private buyers are notorious for failing to show up for an appointment. If they want to buy it, their first offer will usually be much lower than the asking price, so the seller must be prepared to negotiate. 

If and when agreement is reached, the seller will need to produce the ownership title. If there is a bank lien on the title, he must call the bank, request a payoff amount and instructions for processing the payoff and getting the title. This will take several days, and maybe longer. When the seller receives the title from the bank, he should complete the assignment, including the buyer’s information, and take the title to the DMV to complete the transfer. Until the DMV processes the name change, the seller remains liable for any loss caused by the vehicle. Therefore, all insurance coverage must be kept until the transfer is complete. Any delays will extend the sellers legal liability. 

If the seller has an extended warranty or vehicle service contract on his car or truck, this could greatly facilitate the sale. Most warranties and service contracts are transferable for a small fee, and this will give the buyer much more confidence in completing the purchase. This is one of the many benefits of buying a service contract from a dealer when the seller makes his new purchase. There are many reputable service contract providers today, and Trust Auto in Sykesville, MD, works with several of the leading companies.

How the Internet Changes the Way We Sell (and Buy) Cars

A decade ago, it wasn’t uncommon for a car salesman to spend 6-8 hours with a single customer.  They would show the customer 3-4 vehicles, answer broad questions regarding the make, model, and basic amenities, and guide them through a very choreographed sales process.  

Fast forward to today, and the sales model has completely changed.  People spend approximately an average of 2 hours at a dealership when they go to make a purchase.  

Why?

Because of the internet.  

The Internet Changed the Process

Years ago, the sales process consisted of 5 clear and defined steps:

Enter → Research → Dealer Visit → Decision → Ownership

It was a very linear path and oftentimes, the research was done simultaneously as the dealers visit, when the salesman would inform the customer on vehicle stipulations and the differences between makes and models.

Nowadays, the process is much more fluent and the research is done independently by the consumer. There is a self-serve mindset that allows the customer to receive instant information about the vehicles they research and compare.

This is due to the rise of mobile devices.  

Over ⅔ of auto shopping is done on mobile devices because the consumer is always shopping. The average American touches their phone screen 3,000 times in one day, meaning the ability to look at cars and conduct research can happen all day. Anytime, anyplace. 

 mobile users

The internet provides an immense amount of transparency when it comes to cars and MSRP pricing, so there is less haggling and negotiating and customers know that if a dealership won’t give them the price they found online, they can go somewhere else.  It’s a Buyer’s World, instead of a Seller’s World.

Old selling tactics won’t work in today’s car-buying society. So both consumers and dealerships need to understand how this process has changed and how the system works to be effective for everyone.

How Has the Sales Process Changed?

  1. Consumers start with more information

Thanks to the internet, auto shoppers start the process with more information than ever before.  In fact, 42% of customers know the make and model of the vehicle they want to purchase before even setting foot into a dealership. 32% know the dealership from which they are going to purchase a vehicle.  This means dealerships have gotten more competitive in their advertising because they aren’t just selling cars anymore – they’re selling their services, their sales team, and their dealership as a whole.  

Because users know more information before even starting the initial research step, the urgency to buy has increased.

2. Consumers look for maximum transparency

During the research portion of the car-buying experience (that is now a constant, ongoing process thanks to the “always shopping” mentality), people are visiting an average of 12 auto touch-points before making a final decision – and this doesn’t include advertisements seen on social media or online.

Because consumers are spending more time researching and conducting more thorough research on auto websites and 3rd-party platforms, it’s important that a website provides the most information possible – including pricing.  

80% of buyers are looking at prices first during their research process.

Most websites only provide approximately 40% transparency and consumers are being more selective about which dealership they use. So it’s crucial to auto dealerships that their website be top notch (and mobile responsive) in order to compete with other dealerships in their area.  

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3. Consumers need validation when choosing a dealership

Inventory variety and vehicle pricing make up for 50% of why a consumer chooses a specific dealership when going to make a purchase. And one of the most important factors is knowing they aren’t getting ripped off.  

Consumers need price validation.  

This is critical for locking down customers and creating loyalty in your buyers. Everyone wants to know they are getting a good deal. When a consumer is at a dealership, it’s likely they are looking at the same vehicle online, whether it’s on a  manufacturer’s website or a competitor’s website to make sure they are getting the best deal possible. And they aren’t afraid to go elsewhere if a dealership won’t match the price. Make sure your sales team is providing a coherent and comprehensive experience – your online information must match what is being presented in person.  

Dealerships need to be aware of how they reach out to potential customers during the early stages of the process, because that will ultimately affect their decision to make a purchase or not.  Consumers want to be contacted in a way that is most convenient and comfortable for them – if they reach out via text, email, or Facebook, respond to them using the same method of communication.  This puts the consumer in control, which is vital in converting a lead into a customer. They choose the method of communication – it’s the dealership’s job to present the right information at the right time.  

4. Consumers visit fewer dealerships and take fewer test-drives

The decision process is one that consumers make quickly after completing their own thorough research.  

In fact, on average, Americans contact 3.1 dealerships, physically go visit 2.1 dealerships and only 1.6 test drives before deciding which car to buy. Because they already know the make, model, and dealership before going to purchase a car.  This ties back into the first step of the new sales model, making sure you are selling the actual dealership instead of just cars.  Make your dealership appealing and trustworthy and the sales will come. Have a positive online experience that offers full transparency and the sales will come.  Provide your users with all the information required to make an informed decision, and the sales will come.  See a pattern?  

Because consumers are doing most of their car-buying process before even setting foot into a dealership, it’s important that dealerships offer a pressure-free environment and deliver a simple, fast purchase experience. All while providing full transparency.  

It’s simply a matter of how consumers are purchasing vehicles and how dealerships are adapting to those changes and how the sales process as a whole is changing to fit the needs of consumers.  

Dealerships are competing more avidly with local competitors and now, they’re even competing with interaction-free car-buying experiences.

How has this shift affected the way you buy or sell a car?