April 27, 2022

The Electrifying Future of the Automotive Industry

NAC Blog
NAC Blog

The Electrifying Future of the Automotive Industry

In the early months of COVID, the automotive industry came to an abrupt stop. The pandemic forced production plants to shut down, contributing to severe part shortages. Showrooms that were once filled with potential buyers became desolate, causing dealers to scramble for innovative ideas in unprecedented times.

According to NADA, new-light vehicle sales in 2020 dropped 14.7% compared to 2019.

Now, two years later, the automotive industry is in an upswing. Tony Wanderon, CEO of National Auto Care, recently spoke with Corey Smith regarding the future of the automotive industry and how dealerships can keep up. Read on or listen to the full episode of Fixed Ops 5 to learn more!

The Automotive Industry After COVID

In 2021, consumers made their way back to buying cars. Especially with the adoption of digital retailing, dealers were able to adjust their marketing to suit stay-at-home orders. Because of this, customers could easily buy a car online and have it delivered to their driveway.

Additionally, the value of customers’ vehicles skyrocketed, creating the ideal environment in which to buy or order a new car without negative equity looming over the transaction.

But what does the future have in store?

“Just as quickly as it shifted up, it could more dramatically shift down. We could see a lot of devaluation of vehicles, but then we get back into selling vehicles versus taking orders. I think that's something that has really been a change in the industry over the last 12 months,” says Wanderon.

Now in 2022, dealers continue to evolve. With technological advancements and the trend of electronic vehicles, the industry has a new breath of life.

From Flickering Flame to Sizeable Spark, EVs are on the Rise

According to Bank Rate, 59,554 plug-in vehicles (both hybrid and electric) were sold in February 2022. This is a 68.9% increase from February 2021. With their dramatic gains in popularity, EVs have a tighter grip on the industry.

The service drive is bread and butter for dealers, but EVs may cause a shift in how dealers operate.

Wanderon says, “If you look at a customer perspective, on the service drive they want their cars in and out as quickly as possible. They want a seamless process. That doesn't happen on the EV side at this moment. Dealers are going to have to retool and retrain.”

EVs have components that differ from your standard vehicle—an emphasis on technology components, like computers, are at the forefront of many EV services.

Because of this, you need to have technicians who can diagnose and repair properly. When dealerships adapt to these specialized needs, Wanderon believes that the EV market is going to become “much more palatable,” especially in used car markets.

EVs are still being widely adopted by drivers and there are questions about long term reliability. “Reliability is going to be a little bit of a challenge, and I would expect that we'd see more sales of our (F&I) products.”  Wanderon advises dealerships to adapt to the new ways of handling EV service and parts.

But how do EVs affect the F&I industry? Wanderon suggests that vehicle telematics integration and training can be beneficial to dealerships, allowing for new ways of marketing and selling F&I products and service contracts.

The Takeaway

Dealers and F&I providers have adapted and remained resilient over the last two years. Now there are new ways to continue growth, and EVs have played a role in igniting a bright future for the automotive industry.  

Want to get the latest industry insight from Fixed Ops 5? Then checkout our YouTube channel for full video interviews. Tune into the podcast on Spotify, Apple Podcasts, or wherever you listen, so you never miss a new episode!

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