Dealership Evolution and Survival for the Future: Why Dealerships Need to Prepare to Pivot


If the pandemic taught dealerships anything, it’s that the industry and circumstances might force an immediate pivot in business as usual. When non-essential businesses faced lockdowns, survival meant taking business online. Now buying a car online is becoming commonplace, and perhaps the pandemic helped to force this change.

Yet, the economic ripples continue for the auto industry. Dealerships need to deal with the chip crunch, higher interest rates, and even supply shortages. In Adweek, Kim Stonehouse, the head of automotive for Meta, highlighted three ‘unknowns’ that will force dealerships to possibly pivot or simply evolve their business. This trifecta of unknowns includes:

  • Inventory issues
  • Online sales (aka ‘digital retailing)
  • Changing ad measurements

The Chip Crisis

The auto industry has been impacted by the shortage of microchips for quite some time now. The chip shortage might have left some manufacturers unable to meet demand for certain vehicles.

In addition, the increased demand might have put a crunch on the supply of the used market. Buyers might have shopped for used models if they were unable to find what they wanted as a newer model.

Dealerships might have discovered that customers wanted a vehicle they simply couldn’t offer. In some areas, though, dealerships might have informed customers that what was available was their only option. Buyers could have clamored for in-demand models.

The chip crisis and the vehicle crunch that followed might have made dealerships more creative in helping customers find what they wanted. However, the low supply and high demand likely put stress on dealerships and impacted their business and perhaps their bottom line, too. As Stonehouse notes, the end of the chip crisis might still be unknown and high demand could continue.

How is the dealership focused on this future unknown? If the dealership hasn’t mapped out strategies on how to thrive during the semiconductor shortage, this might be the time to think ahead.

Dealership Evolution and Survival

Pivoting Online

One major change related to the pandemic was the move to online sales. Some dealerships didn’t even consider offering online purchases before the lockdowns. However, in areas where dealerships had to close their doors to foot traffic, survival might have led to online sales and other tools.

Thankfully, the restrictions of the pandemic are mostly in the past. Masks have been removed, doors are open, and business is mostly back to normal. However, many customers have become comfortable with buying online.

The 2021 Cox Automotive Car Buyer Journey Study noted that ‘mostly digital’ buyers—which were defined as those who spent more than 50 percent of their buying journey online—were more satisfied than ‘light digital buyers’ with the price they paid, their experience and the selection. In fact, 69 percent of ‘mostly digital’ buyers reported that they were “satisfied with the price paid.” Nearly three-quarters of these buyers also reported that they were happy with the shopping experience.

If those who spend the majority of their buying experience online report higher satisfaction, perhaps dealerships offer more online tools for these buyers. In addition, promoting online buying options could help potential customers understand their options via dealerships.

For dealerships that think that buying online is in the past, it might be time to pivot or at least expand the shopping options. Online car shopping might be the new in-person experience. Dealerships could consider providing augmented reality tools to create car preview experiences, extensive slideshows of available models or even more advanced chat capabilities for customers shopping online.

How Ad Success is Measured

Dealerships and all businesses need to know the reach and impact of ad campaigns. As advertising opportunities have favored online platforms, focusing on the right customers has become easier. Ads can be targeted to a certain area, age or buyer. However, consumer privacy is important.

Stonehouse explained that “(m)measurement is evolving to be privacy-first. Advertisers are now measuring causality between ad exposure and business outcomes through a secure server to server integration which controls how data is shared, while respecting customers’ privacy choices.”

Dealership Evolution and Survival

Moving Forward and Rolling with the Changes

Stonehouse focused on three key unknowns impacting the automotive industry. Each of these unknowns also might have different layers.

For example, pivoting to online sales can influence dealerships to create more immersive experiences online and expand their digital imprint. Even if more customers were to prefer the online realm for their shopping experience, dealerships can work to create an environment online that seemingly mirrors the in-person showroom experience.

Again, dealerships could integrate augmented reality experiences and tools into their website offerings. An augmented reality showroom could allow the consumer to preview any vehicle model in the user’s environment. They could see how the car looks in their garage or their driveway. Maybe the augmented reality showroom lets them add different features to their car or change the paint color.

The online experience also could integrate more interactive features to engage a digital audience. Dealerships could use animated car stock photos that show a vehicle model driving into the photo to create an impactful hero image.

Dealerships also could offer spin photos online. These photos showcase a specific vehicle in 3D; site visitors can use a mouse or their fingertip to interact with the vehicle image. They can rotate the vehicle to view it from different angles. Dealerships also could integrate panorama photos online to let shoppers explore the interior of a vehicle.

High Demand and a Chip Shortage

Dealerships are already navigating a high-demand market amidst a chip shortage. Unfortunately, there doesn’t seem to be an exact end to the supply crunch. However, as interest rates have risen, demand could decrease.

The Fed recently announced that it will hike interest rates by another 0.75 percent. That means that auto loan interest rates will likely increase, too. In fact, CNBC notes that the newest rate increase could mean that new car loan interest rates could rise to 5.5 percentWith rising interest rates, though, dealerships might face another issue as buyers perhaps deal with being unable to afford the vehicle they want.

Dealership Evolution and Survival

Preparing for the Future

All businesses need to stay on top of economic and market changes. Dealerships are already dealing with chip shortages, increased demand and online sales. However the future might mean that dealerships need to look at how these issues will continue to impact business.

In the case of online shopping, the impact could be positive. Many buyers are comfortable shopping online, and even online car shopping is becoming the norm. Offering more tools and resources online could help dealerships create a more impactful digital shopping experience for customers.

While three ‘unknowns’ were highlighted by Stonehouse, there could be a fourth: rising interest rates. As the Fed has now bumped rates by another 0.75 percent, dealerships might face challenges related to customers finding a car that’s affordable for their budget. Since interest rates impact monthly payments, providing more online tools—like car payment calculators—could help shoppers better understand how changing interest rates impact their buying bottom line.

The future will likely bring more changes, disruptions and unique challenges to dealerships. However, dealerships that survived the pandemic might be prepared to pivot and evolve in order to continue to survive and, ultimately, thrive in a market that can be a bit unpredictable.

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