Given the current landscape, now, more than ever, brick-and-mortar dealers are going to need to look outside traditional car sales to find innovative ways to reach customers. So, what trends should dealers keep an eye out for in 2020?
Over the past two decades, the average car loan has remained steady at five years, but now we’re seeing a shift towards longer-term loans. People are remaining in cars longer, which drives down the demand. In other cases, people are having to abandon their loans due to being underwater. That’s where the new subscription model comes into play, which offers customers an alternative option to free themselves from long term lease commitments and drive what they want, when they want.
Not surprisingly, this enticing new subscription model will likely experience rapid growth in the coming months since it provides drivers the freedom and flexibility to use multiple vehicles, while simultaneously giving brick-and-mortar dealers another avenue to rid their lots of inventory. An alternative to owning or leasing a vehicle — subscription platforms like Clutch, Flexdrive and Drive It Away — benefit dealers by prompting repeat customer visits for things like subscription renewals and vehicle servicing.
Every time a customer renews their subscription, they’ll communicate with a dealer. From a dealer’s perspective, the subscription model allows dealerships to continually keep in contact with their customers, building better lifetime relationships over the long run.
I don’t have to tell you that brick-and-mortar dealerships have habitually spent a tremendous amount of money advertising with massive, third-party aggregators like Autotrader and Cars.com. These behemoth businesses have huge overhead due to the operating costs associated with them.
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