OCTOBER 2024 IN AUTOMOTIVE
As we kick off a new month in the automotive industry, there’s a lot to unpack—from ongoing market disruptions to potential opportunities on the horizon. October is a time of consistent optimism in my books: a time for dealerships to assess the challenges ahead and move into Q4 Let’s break down the key developments and what they mean for your dealership strategy. Here’s what you need to think about:
Port Closures and Strikes: Supply Chain Disruption IS HERE AGAIN
At 12:01 AM today, 25,000 port workers walked off the job, initiating a strike that could have massive ripple effects on the supply chain. With ports shut down, the flow of automotive parts, components, and even fully assembled vehicles could grind to a halt. The impact won’t be limited to the U.S.; Canada is expected to feel the strain as well.
This scenario may feel all too familiar, think of COVID-era supply chain crises that caused significant delays and cost increases across industries. As demand stays strong but supply becomes constrained, prices will inevitably rise due to simple supply and demand economics. This will also hinge on the length of the stike, and if workers are able to return to port work in a timely manner. The key takeaway here is to anticipate potential disruptions and adjust your inventory strategy accordingly. You might need to adapt to sourcing alternatives, manage expectations with your customers, and potentially brace for cost increases across the board. This isn’t specific to automotive: this could touch everything.
Reflecting on September
A notoriously finicky month (every single year, may I remind all of my dealer friends), September has come to a close.
As we move into Q4, it’s worth reflecting on the past few weeks: rising auction costs over Labor Day weekend, unpredictable shifts in paid search costs, surges in sales, and a myriad of challenges facing major brands like Stellantis and Ford.
The elections added uncertainty to the market, while fluctuating interest rates caused additional unease for buyers and dealers alike. All these variables made September a challenging month for many dealerships.
But with those hurdles behind us, we now have the opportunity to reset and look forward to a (hopefully) more stable October. Every dealership should be focused on closing their books and closing lingering leads from September, reviewing those that may have been missed, fumbled, or anything else.
Market Stalls: How to Combat a Potentially Flat Q4
The latest forecasts predict a flat Q4 for the automotive market, with vehicle sales hovering around 15.7 million units for 2023. While this might sound discouraging, it’s crucial to remember that market-wide trends don’t dictate individual dealership success. We saw the impact of these stops and starts over the course of September, and October is no time to use that as an excuse. We’ve seen what it looks like: let’s capitalize on it.
We’ve seen almost all of our dealerships buck the trend with increased lead counts and gross profits. This tells us that while the broader market may be stalling, growth is still achievable with the right strategy. Now is the time to be proactive. Use data to drive your decisions, improve lead nurturing efforts, and focus on converting every potential buyer.
The math is simple: More leads + better conversion = more sales. But, of course, execution is key.
Rate Drops Could Spur Sales Growth—But Timing Is Critical
Bloomberg’s experts are optimistic that auto sales will pick up as interest rates drop, making it easier for consumers to finance new vehicles. Lower borrowing costs could open up higher borrowing limits, which is great news for dealerships.
However, a recent survey by Edmunds reveals that one-third of American car buyers are holding off on purchases until after the November 5 election. This means that while we can expect a sales uptick, it’s likely to be delayed. The best move now is to prepare your team for the eventual post-election sales rush. Educate buyers who are on the fence about the benefits of purchasing now versus waiting, and be ready to move quickly when those hesitant shoppers re-enter the market.
Hurricane Helene's Impact: Disruption in the Southeast
Hurricane Helene left a trail of destruction across the southeastern U.S., but we’re grateful that our Florida team came out unscathed. That being said, the storm disrupted lives, homes, and businesses, including automotive dealerships and parts of the manufacturing supply chain. This reaches up to North Carolina, for example, where a local mining community that is critical for the production of semiconductors has been ravaged.
For those dealerships directly affected by the hurricane, rebuilding will take time. For others, it’s essential to understand that delays in supply from affected regions may impact your inventory in the coming weeks. Whether you’re in the southeast or not, prepare for possible shortages and delays in vehicle or part shipments.
Homes, people, businesses, and travel will be impacted. There’s no cure for this except time and resilience. Southeast dealers must understand that their communities are in need. There’s potential to show up for your local community in unique and impactful ways in times like these: don’t screw it up!
EV Ups and Downs: Mixed Signals for the Future
Ford continues to push forward in the electric vehicle (EV) space, while Stellantis grapples with decreased demand in key markets like Italy. The CEO of Stellantis (already in muddy waters) is set to address Italy’s parliament on the topic. Meanwhile, new EV designs, particularly in the commercial delivery space, are getting positive attention.
The lesson here is that the EV market remains volatile, with demand fluctuating depending on region, regulation, and consumer sentiment. For dealerships, the key is flexibility. Ensure your sales team is well-versed in EV options while also being prepared to shift focus if demand softens in your area. Staying ahead of the curve in terms of customer education and market trends will allow you to pivot as needed. Sure, you should have the inventory and chargers for those that are interested, but I would not currently suggest focusing a full strategy in most markets for EVs.
What Does This ALL Mean for CAR DEALERS?
As we move through October and head into Q4, the automotive industry is at a crossroads. There’s a ton of potential in Q4, supply chain disruptions, market uncertainty, fluctuating interest rates—opportunity still exists for those who plan ahead and act decisively.
Dealers need to focus on converting the leads that are already in-market. There’s absolutely no shortage of leads (let me show you!) out there, but the closing rates vary dramatically by dealer. Be the dealership that closes. Don’t be the dealership that tries to out-spend a poor sales floor.
By being proactive, keeping an eye on rate changes and market sentiment, and preparing for potential shortages, you’ll be better positioned to thrive despite the headwinds. There’s no predicting the future, but at the end of the day: people still need cars, and the demand for vehicles isn’t going away anytime soon. That includes ICE options.
What’s Your Outlook for October?
Will it be more of the same, or will this month offer fresh opportunities to grow and overcome? Either way, now is the time to take stock, sharpen your strategy, and get ready to adapt to whatever comes next. We’ve diving in with updated budgets, strategic campaign focuses, and sales + social trainings at Dealer Blue Sky to keep our dealers selling. If you want to be one of those well-prepared dealers: let me know!
