What Can We Expect From the Auto Industry in 2023?
While the industry continues to recover from supply chain shortages and a burgeoning energy crisis, consumer demand remains strong. 2023 could be a year of significant change for the old “box on wheels” as new technologies make their way to dealer lots.
As a result, Cox Automotive has increased its full-year new-vehicle sales forecast to 14.2 million. However, elevated prices and high interest rates will continue to hold back sales growth.
1. Electric Vehicles
After a dip in global light vehicle sales during the pandemic, EVs look to be on the rise. Manufacturers are expected to continue ramping up production of these new models, and consumers are becoming more comfortable with the concept of plug-in vehicles.
Contemporary EVs are evolving into cutting-edge technological marvels, loaded with entertainment and connectivity capabilities that appeal to younger drivers. Some, like the Lucid Air Pure, have a record-breaking 520-mile range and are ideal for long road trips and apartment dwellers who can’t charge their vehicles regularly.
Despite the rising popularity of these vehicles, dealers face several new challenges. From worsening supply chain disruptions to aggressive digitization and artificial intelligence advancements that streamline more customer journeys, dealers must stay ahead of these trends to keep their business thriving in 2023.
2. Autonomous Driving
Autonomous driving technology is evolving rapidly. It is transforming from advanced driver assistance systems (ADAS) that aid drivers to SAE level 5 self-driving vehicles that operate with no human intervention.
Cars are using a range of sensors to map their surroundings. These include radar, video cameras and lidar that sense speed, read road signs and track other cars. They can also communicate with infrastructure like traffic lights, and even self-park.
However, autonomous cars can fail to react to unusual situations. For example, a Cruise vehicle rear-ended a San Francisco bus in March 2023 due to a software error. This has highlighted the need for a robust legal, liability and regulatory framework. The industry must work to overcome these obstacles before self-driving cars become mainstream.
3. Connected Vehicles
Automakers and tech companies have formed partnerships due to the constant need for new technology in vehicles. This is especially true for electric and connected cars, which require specialized software.
Cars will be able to communicate with each other and with road infrastructure through short-range radio signals. This will allow drivers to receive notifications and alerts, such as a red light that’s about to change or an icy road ahead. It will also allow cars to monitor their own performance, like detecting when a part may need maintenance long before it goes out entirely.
The technology behind these features will also help manufacturers and third-party providers monetize infotainment and other features through a pay-as-you-go subscription model. These upgrades will be facilitated by over-the-air updates (OTA). The result is that drivers can avoid paying for costly repairs and upgrade their car’s functionality without taking it to the dealership.
4. Digital Touchpoints
A digital touchpoint is any customer or stakeholder interaction that happens through your online channels like social media, websites, portals, and more. These digital touchpoints play an important role in converting potential customers to paying customers. One second-rate experience can send them running to a competitor, so it’s crucial that you optimize your digital touchpoints.
The auto industry faces a number of challenges in 2023, from high interest rates to lingering supply chain problems. However, new strategies offer dealers the opportunity to boost online services and streamline more customer interactions with artificial intelligence. A strong focus on digital touchpoints can help dealerships overcome these hurdles and build loyal customer relationships. These efforts can take the form of personal milestone email marketing or a well-designed cart and checkout page that boosts conversion potential.
5. Online Sales
The pandemic forced a host of companies to embrace online sales, and e-commerce is now a major car industry trend. Startups such as Lucid, Rivian and VinFast have created digital portals that allow buyers to complete the entire car buying process from start to finish. Many dealers have also adopted this model and now offer the option to buy a vehicle via the Internet.
But even as new-car prices are beginning to come down, the economic headwinds of higher interest rates, a possible recession and continuing supply chain issues may continue to hold back sales growth in 2023. And a slow recovery could mean continued pressure on dealer profits.
As a result, many dealers will focus on improving the customer experience with virtual shopping tools and other innovative ways to sell cars.