What to Expect in the Future Auto Market and How to Manage Change

The world is obviously changing and, as we have been saying, these changes are  impacting our industry as well as our lives and routines. These changes include vehicle technologies, manufacturing times due to supplier constraints, dealership processes, their teams’ needs and several new or modified market requirements that need to be met.

Vehicle Technology New vehicle technologies are emerging that are moving the industry into cleaner energies, and environmentally-focused organizational cultures. Tooling, processes and new technical skills are now required to comply with this tendency. Some investments are needed to comply with zero-carbon footprint facilities. As the current technology tends to be electric cars, some areas need to be refurbished and adapted for battery disposal, for example. That will oblige dealerships to modify processes and logistics, reduce space requirements for workshops and spare parts storage. 

Training for next-generation technicians is evolving and we are still developing the new content to be included in programs so that  teams will be prepared for the new requirements that will continue to emerge. Quick change will be a constant so constant training reinforcement will also be a must to keep playing in the market.

Customer’s Needs and Routine Changes Families worldwide have changed, modified or adapted their daily routines based on the new reality we are living. Home office is now more common than before COVID, teenagers are more into chats and virtual contact with their school friends, and we are all used to video conferences (Zoom, Teams, Webex,). Regarding professional routines, parents have reduced mobility requirements because more meetings are held through  video platforms. As home office has become increasingly popular, it has helped them gain time and money as a result of reducing their mobility needs. 

All these facts have resulted in fewer vehicles entering into the service bays. As a consequence, there is a smaller inventory requirement related to spare parts. New options, such as vehicle pickup and delivery services, have surged. Retention strategies have to be shelved because of  these changes in routine, needs and mobility. Today, customers decide their preferred dealership based on their new daily routes, needs and available time (from the dealership near the office to the dealership near home, for example). 

On the other hand, due to scarce inventory and higher freight costs than before the COVID pandemic, new vehicle prices have increased considerably, so the average time our customers are keeping their current vehicle is expanding as some  are unable to pay the current prices for a car that is similar to what  they are driving, while others are cautious of taking on the risk of a new loan in the face of possible  recession in the near future. This is also helping aftersales income and margins.  

Scarce Labor Force 

Newcomers

Although the Mexican market has greater sales’ potential than what we are seeing today, we haven’t had significant growth in recent years. Nonetheless, several new Chinese brands are arriving into the country, pulverizing competitor  brands’ market share and requiring new dealer networks and corporate teams to supply a market that has not really changed in terms of  size. There has been a lot of movement among manufacturers’ workforce and the dealership teams trying to fill in those new opportunities. If you consider you need, let’s say,  around 50 employees per dealership and the industry and each newcomer (new Chinese brands) opens just two dealerships per state in our country, they will require around 3,200 new employees per brand for their dealer network. 

Existing Dealerships

Nowadays, there are not enough professionals in the industry to meet the industry’s needs. Traditional market brand dealerships are constantly hiring new employees. As a result, and  also due to the lack of available talent, labor costs have increased. Training new employees also  takes time and resources. 

Manufacturers and National Sales Offices

The movement of industry experts among manufacturers has also impacted our industry and has obliged traditional market players to reinforce their employee retention programs, offering better benefits to their current teams. Newcomers have attracted experts to accelerate their brand’s market share capture.

Logistics

Labor force availability in the logistics sector has also suffered during the pandemic. As there was a long period of time when there were few or no requirements to  transport cars from manufacturing plants or from the different ports, several truck drivers and port employees in charge of disembarking containers moved into other areas due to the long two-year period in which they were not able to earn enough money.  Some plants also shut down, or reduced production, and those workers, including those in other industries, also needed to manage their way out of the crisis., Now that inventory volume is slowly returning, we are also facing delays in vehicle and parts deliveries due to this factor.

So, expect constant change, new opportunities and options in the industry that will continue to evolve. Manage uncertainty and be open to innovation and new formats.