The past five years have been a roller coaster for auto dealerships in the U.S. A pandemic, supply chain disruptions, shifting consumer preferences, and economic volatility have collectively forced dealers to rapidly adjust in order to thrive. While the industry may have shown signs of normalization in the past year, a number of challenges persist. 

Below are a few data points based on January-November 2024 data that highlight how dramatically the market changed last year compared to past years, as high interest rates, fluctuating inventory levels, and ever-evolving consumer expectations continue to shape the automotive market:

• The average transaction price of new vehicles was $47,465 in 2024, a 27.2% increase over $37,310 in 2019.

• The ATP for used vehicles was $27,252, a 32.2% increase from $20,618 in 2019.

• Last year’s average annual percentage rate for new vehicles was 7.1%, compared to 5.9% in 2019.

• The average used-vehicle APR was 11.4%, compared to 8.7% in 2019.

• An Edmunds survey found that the vast majority of consumer expectations on pricing and interest rates for new and used vehicles did not align with market realities in 2024. 

Meeting Fast-Changing Consumer Demands

Today's car buyers demand a seamless and personalized experience. Dealerships must adapt to the trend by leveraging first-party data to understand and cater to individual customer needs. By utilizing Google Analytics 4 and other software tools, dealerships can collect and analyze data on customer behavior, preferences and purchase history. This enables them to tailor marketing messages, offers and in-store experiences to resonate with each customer, improving customer satisfaction and driving sales.

The Power of Multi-Platform Marketing 

A multi-platform strategy is essential to reach today's diverse consumer base. This involves not only utilizing various advertising platforms, like social media, video, email marketing, connected television and search-engine marketing, but also implementing software solutions within the dealership, such as customer data platforms, customer relationship-management software, equity mining solutions, and acquisition software. By combining these software platforms and digital channels, dealerships can effectively reach their target audience and build brand awareness. 

Kevin Frye, marketing director at the Wyler Group, notes that smartly leveraging multiple platforms and artificial intelligence tools are major contributors to Wyler’s success as a top-50 U.S. auto group. 

“Dealers have had access to tremendous levels of both first- and third-party data to best target shoppers for several years. Now AI is creating new opportunities to make this data actionable in real time and providing a more consumer-facing experience that has not been available before,” he said. “Both dealers and consumers should be excited for a game-changing year within automotive retail.”

Adapting to Streaming and Connected TV 

Another major trend is the shift in consumer television viewing habits toward streaming services and connected television. Aaron Seissiger, director of strategic accounts at Strategus, says that data-driven CTV campaigns enable auto dealers to segment their target audiences and deliver personalized content, ensuring relevance to prospective buyers. 

“CTV advertising empowers auto advertisers to measure campaign effectiveness throughout the buyer’s journey, from top-of-funnel metrics, like impressions and video completion rates, to bottom-of-funnel results, such as website conversions and footfall attribution,” Seissiger said.

Embracing Transparency and Convenience 

The rise of online shopping, the importance of transparency, and the desire for convenience are shaping the way car buyers interact with dealerships. By embracing the trends and adapting sales and service processes, dealerships can stay ahead of the competition.

Looking ahead, the automotive industry is poised for further transformation. The growth of first-party data strategies, increased reliance on AI and automation, and a focus on sustainability will present both challenges and opportunities for dealerships. To thrive in this dynamic environment, dealers must invest in digital marketing, prioritize customer experience, embrace technology, train their teams, and stay informed about industry trends.

By understanding the evolving market, leveraging data-driven insights, and adopting a multiplatform approach, dealerships can position themselves for long-term success. 

Jessica Caldwell is head of insights at Edmunds, and Ian Isch is Edmunds’ executive director of sales and dealer development.