The age of COVID-initiated supply shortages at car dealers is over.
And that’s placed pressure on carmakers and dealers to price their unsold wares more aggressively, The Wall Street Journal (WSJ) reported Sunday (Dec. 29).
During this month’s hectic shopping season, car buyers got — on average — about $3,400 in discounts and other incentives. That’s up more than 25% from the previous year, WSJ said, citing data from research firm J.D. Power.
An uptick in promotions like zero-percent interest rates and cash-back offers, the report added, has been a balm to inflation-weary consumers after years of paying steep prices for cars.
These stronger promotions, the report said, have helped U.S. vehicle sales, which were up 7% for December, according to J.D. Power projections. Most carmakers will release sales figures on Friday, WSJ said.
“There are good deals to be had out there,” said Geoffrey Pohanka, a Maryland auto dealer for brands like Chevrolet, Jeep and Nissan.
According to the report, U.S. vehicle sales for the year were projected to climb 3% to around 16 million sales, down from the 12% increase in 2023. Industry forecasts show sales to rise again next year, WSJ said.
In related news, PYMNTS wrote earlier this month about car dealers’ embrace of artificial intelligence (AI). This move has led these dealers to report revenue gains, according to a recent survey by auto customer information company Fullpath.
That survey also found that 80% of car dealers plan to increase their AI spending in the new year, using the technology for things like customer support, personalized marketing campaigns and optimization of digital advertising. As PYMNTS wrote, this tech is transforming the traditional dealership model by analyzing customer data gathered during sales to personalize offers and provide digital tools that give consumers more control over their purchases.
Other dealerships have added AI-powered chatbots to their websites to promptly address customer inquiries and schedule appointments, improving response times substantially.
“With AI platforms, dealerships gain a comprehensive view of the buying experience from start to finish, including online browsing habits and past purchase history, allowing them to accurately predict who is most likely to buy and when,” David Boice, the CEO and co-founder of Team Velocity, a B2B automotive tech company, told PYMNTS.
“These predictive capabilities have transformed dealerships’ approach, allowing them to prioritize leads with the highest likelihood of conversion, ultimately driving more effective sales strategies.”
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