As discussed in our 2023 Automotive Industry Trends article in October last year, the auto market is experiencing significant turmoil. However, the current issues expand beyond chip scarcity, EV legislation concerns, and tech partnerships. 

Now, manufacturers and dealers also contend with worsening supply chain disruptions, aggressive digitization, and a need for artificial intelligence (AI) advancements to streamline more customer interactions. 

As such, dealers must remain mindful of trends affecting the Q2 2023 auto industry outlook and look to adapt as new strategies present themselves. This article outlines seven such developments to watch now and throughout 2023. 

Q2 2023 Auto Industry Outlook: 7 Trends 

1. Improving Customer Experiences Will Become a Critical Differentiator 

Cars have minimal pricing differentials, so dealers must find other ways to distinguish themselves from competitors. One way to stand out in a crowded market and boost traffic is by providing excellent customer journeys.  

In fact, recent studies show that: 

• 55% of potential buyers will do business with the dealer providing the best possible customer experience, even if that dealer does not offer the most competitive prices.  

• 75% of customers would visit dealerships more often if the purchasing process were made more accessible. 

• 60% of potential customers would buy more quickly if the process were more accessible. 

In an era where excellent customer experiences have emerged as the new competitive asset and consumers have more options to shop online, auto dealerships can no longer compete on price alone. 

2. The Industry Must Find New Ways to Address Supply Chain Woes 

The automotive industry still must find solutions to the lingering supply chain challenges brought on by the COVID-19 pandemic three years ago, which will require new and innovative solutions to clear these bottlenecks made worse by the conflict in Ukraine.  

Manufacturers will likely move away from “just-in-time” strategies and switch to “inventory banking” to increase supplies, regardless of the potentially high inventory costs.  

Automakers are also more likely to integrate vertically integrated models, notably in the battery value chain, focusing on localized battery manufacturing instead of cell imports from one or two major suppliers to protect themselves from added supply chain disruptions. 

3. Smart Technology Will Expand 

Contemporary EVs are evolving into cutting-edge technological marvels, laden with connectivity and entertainment capabilities akin to smartphones and geared toward younger users.  

As a result, manufacturers are speeding up their plans to implement technologies like sophisticated driver-aid systems in vehicles to draw in young drivers.  

While proposals for complete autonomy have stalled due to the increasing complexity of the technical and regulatory environments, manufacturers expect to concentrate more on offering individualized in-vehicle experiences, including: 

• Voice-activated services 
• Biometric controls 
• Digital cockpits  
• Advanced connect car capabilities via upgraded 5G 
  
  

4. Online Shopping Will Become More Popular, But the Process Needs Work 

2020 was a turning point for online car sales.  

Whereas only 1% of all car sales were made online in 2018, nearly 10% were online in 2020. The pandemic helped to accelerate the abrupt change in shopping behavior, but the worldwide development of e-commerce is the most significant factor. 

Today, nearly 30% of consumers are comfortable completing a purchase process online, and almost all vehicle buyers expect dealers to offer more online options permanently as the industry experiences increased digitization. 

However, not all car buyers are happy with their initial online purchasing experiences. According to two new industry studies, buyers grew increasingly unsatisfied with their overall experience as dealers continued to battle low inventory, citing unacceptable waiting times after pre-orders. 

From now on, dealers must streamline the negotiating and buying processes as much as possible to compensate for potentially long waiting periods. 

5. Video Will Serve as a Substitute for In-Person Test Drives and Service Appointments 

Recreating great customer experiences online becomes more critical as in-person customer visits decline. Recent studies show the following: 

• Online videos influence nearly 75% of vehicle consumers when purchasing.  

• For 65% of consumers who use web videos to research their purchases, innovative formats like the 360-degree video might persuade them to buy a car without first giving it a test drive. 

As such, including video walkarounds of vehicles on the dealership website gives potential buyers the same degree of thorough information they would receive if they viewed the car in person.  

Dealers might even take it a step further and have the salesperson create a personalized video for the consumer after they have an interested buyer. They can even mention the customer by name and draw attention to aspects of the vehicle that supply advantages they are specifically seeking.  

Also, recording videos from the service lane can help boost fixed op revenue because customers can see the problems firsthand, encouraging them to take repair suggestions more seriously. 

Service lane videos also provide a personal touch because technicians include the consumer in the inspection process by recording the walkaround and explaining the necessary repairs. This tactic increases their trust in the business and reduces denied repairs. 

6. As Supply Chain Improves, So Will EV Production 

The energy crisis has badly impacted manufacturer profit margins. As a result, many automakers might shift costs onto consumers in 2023 to keep production moving.  

However, as the industry discovers strategies to ease supply chain difficulties (as discussed above), the market should see a significant boost in EV production.  

In 2023, analysts expect the US light vehicle market to expand by up to 12%, with total sales nearing 15 million vehicles. EV sales could increase as much as 60% to nearly 1.5 million cars, or a 10% market share, up from 7% in 2022. 

7. Artificial Intelligence Will Boost Marketing Automation 

Marketing automation is now easier than ever for dealers, thanks mainly to AI. 

Dealerships will use AI in 2023 to streamline operations and inform business strategy. Three simple ways dealers can apply AI are as follows: 

• Task Automation. Dealers can now automate routine tasks to free up staff time for dealership management. 

• Chatbots. Customer service teams can leverage AI to respond to frequent customer inquiries via internet chat to free up personnel to address more complex requests. 

• Advertising. Marketing teams can use AI in their social, search, display, and video ads to effectively target and reach potential customers. 

Dealers will have more time to concentrate on their customers and boost sales if they streamline these automatable tasks. 

Keeping Pace Requires the Best Solutions 

Customer demands for improved buying experiences, desperately needed solutions to supply chain disruptions, industry digitization, and the emergence of AI present manufacturers and dealers with ever-evolving challenges. 

However, those hurdles offer many new opportunities, from strategies to boost online services to streamlining more processes via automation. Finding and integrating these strategies is vital to make up ground in a crowded and highly competitive environment. 

The ideal way to handle these developments is to equip your dealership with digital and data-driven technology to position you for these inevitable changes. 

Contact us today and learn how Affinitiv’s proprietary technologies can help you adapt to disruptive trends affecting the Q2 2023 automotive industry outlook.