Between ride sharing services like Uber and Lyft, new technology including autonomous vehicles, and concerns around trade and tariffs, there’s a lot of speculation about the future of the automotive market in the US. Some experts believe that the demand for cars in the US is going to be dramatically reduced as a result of these trends.
We have a hard time believing Americans are going to stop buying cars, but we’re certainly witnessing a shift. Between increased connectivity, electric and hybrid vehicles, and ADAS, the auto industry is definitely evolving.
Marketers will have to adjust their strategies to keep up. In order to take advantage of a growing population and higher disposable income among car buyers, brands can leverage location data to better understand foot traffic patterns that lead to sales. Blis’ new foot traffic data offers marketers an opportunity to adjust their strategies and gain a competitive edge by better understanding real-world consumer behavior and purchasing trends at dealerships.
Market Conditions are Always a Factor – But You Can’t Control Those
After experiencing a bit of a drop in 2012, the number of licensed drivers is expected to hit nearly 230 million by the end of this year (a jump of almost 15 million drivers in the last five years), and the number of registered “light duty vehicles” sat at about 200 million. In terms of trends, the growth in the number of drivers in the US has declined slowly and steadily since the 1950s – from 3.6 percent growth in that decade to just .81 percent in the 2010s. That said – even slow growth is growth. 230 million is a lot of drivers, and the population continues to grow.
However, car loan rates are higher. In January, the interest rate on a new car purchases averaged 6.19 percent, a jump from 4.9 percent in 2018, while average monthly payments ballooned $524 to $551 in the same period.
Yet, despite concerns about the market, there is lots of good news for car makers right now: consumer confidence is currently at a six month high in the US, according to Bloomberg. This means an increase in consumer plans to purchase cars, homes and major appliances. Consumer confidence has a direct correlation to auto sales of 0.6, which means that approximately 60 percent of the time, auto sales will follow consumer confidence’s trends. This is supported by the Bloomberg report referenced above, which also found that the number of Americans planning to buy a car within six months is currently at a record high.
On an equally positive note, Personal Disposable Income continues to grow in the US and it also has a solid correlation to auto sales of 0.7.
Here’s the Factor You Can Control: Converting Footfall to Sales
Blis observed dealerships across the country and found that footfall in February had a 0.5 correlation to sales in that month. For us, that was enough to justify closer monitoring of this metric – particularly since it’s the only variable, out of so many economic and external factors, that dealerships can actually take actions against to impact sales.
We looked at three of the most popular makes in the US in February: Honda, Nissan and Toyota. Toyota and Nissan appeared to be more efficient in leveraging footfall, while Honda seemed to have greater challenges converting customers. So, while more consumers are walked into a Honda dealership, Toyota and Nissan were more likely to convert a walk-in into sales.
So what’s the key for converting that footfall into sales?
For starters, brands absolutely must understand their competitive surrounding dynamics. Which brands have nearby dealerships, and how do buyers of those brands interact with your brand? We found, for example, that close to two in five consumers who visit a German dealership will also browse a Japanese dealership in the western US. That exposes opportunities for both German and Japanese auto makers to monitor traffic at dealerships and target shoppers who visit competitor lots.
In this case, the German dealership built on the loyalty its customers had to the brand – and it paid off. Having real-world intelligence extracted from footfall, loyalty and crossover data can help build a stronger strategy that will drive more sales. Because a brand’s loyal shoppers are more likely to be positively predisposed to have more of your brand and products. Endeavor to stretch family bonds to sell multiple cars to the same family. Use relational than transactional communications. These strategies will have a longer-term effect and strengthen after-sales communications, renewals, and overall grow a more solid foundation of customer base.
Having accurate footfall data and a macro-view of real-life behavior can help dealerships and OEMs in a number of ways, both at the local and national level. Blis can deliver metrics on in-store visits, competitive visits, crossover and loyalty, so dealerships can identify threats and opportunities and change the competitive scenario.
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