3 Challenges, 3 Opportunities In 2019
Like any new year, there is optimism surrounding opportunities that lie ahead and trepidation regarding uncertainty and challenges. Both are natural, and being aware of each can help you make the most of whatever comes your way this year.
Affordability for you. Customers today are demanding more technology in their vehicles, making it pricier for you to get your hands on cars that your customer base wants to buy. While it can cost more upfront, these vehicles can demand a higher premium and may require richer F&I products to help you make up for the added acquisition costs.
Affordability for customers. This demand for technology could also make it more difficult for customers to afford the vehicle they want. As pricing holds strong and competition rises for these vehicles, it could prove difficult to meet customer demands. Identifying these customer demands early and finding reliable sources to obtain these vehicles is a great way to get ahead of the competition.
Rising interest rates. The economy at large is keeping an eye on rising interest rates. From an automotive standpoint, this could result in customers buying less vehicle in order to have manageable monthly payments. This is why it’s crucial for you to know your customer base, the vehicles they desire and the typical loans for which they qualify.
Consumer confidence. Low unemployment, low gas prices and high optimism highlighted the year for many consumers. These factors together create a favorable environment for car buyers, especially as tax returns start rolling in.
Desire to own. A recent NADA survey found that 90% of consumers preferred to own their vehicles. This preference over leasing favors used car dealers who have a more difficult time appealing to leasing customers. Lease customers who are looking to get into a higher-end vehicle could have their cake and eat it too by owning a used vehicle that features all the bells and whistles they want in a car.
Defaults below 1%. For the eighth straight month, the S&P Dow Jones Indices and Experian reported default rates below 1%. This tells the tale that car buyers are making their ways toward equitable positions that put them in prime position to trade in and get into a new purchase.