Beyond the Rearview Mirror: Reflecting on 2023 Auto Trends and a Glimpse into the Future of Dealerships in the New Year

As the final miles of 2023 unfold, dealerships find themselves at a critical juncture, headlights illuminating the road ahead into the promising expanse of 2024. The automotive industry has left imprints that demand attention — patterns that offer valuable insights for dealerships crafting their course forward, like road signs.
Unveiling the changes and opportunities, we explore three defining trends shaping the course of automotive progress and influencing dealership success for the approaching journey in 2024.

Source: Experian Automotive VIO as of September 30, 2023 (all motorized, road-registered vehicles) | Automotive Market Trends Q3 2023

Surging New Vehicle Registrations and Shifting Preferences

In the rearview mirror of 2023, the automotive industry reflects a notable surge in new registration volumes, charting a course toward 14.9 million annualized registrations. Additionally, this upswing, marking a robust 12.7% increase from the prior year, underscores a shift in consumer dynamics and preferences. A clear trend stands out: more people are buying utility vehicles, making up a significant 56.9% of all new vehicle registrations. As we navigate this trajectory, another noteworthy detail is that gasoline vehicles continue to exert influence, showcasing year-over-year volume growth in U.S. light-duty vehicles. Therefore, these changes prompt dealerships to reassess their methods. Furthermore, a need to adjust strategies to better align with the changing preferences of consumers in the automotive industry.

Used Vehicle Trends: Navigating Decline and Crafting Profitable Strategies

In contrast to the surge in new registrations, the landscape for used vehicles tells a different tale. Registrations for used cars continue to decline, down 2% from the previous year, amounting to 29.3 million. Notably, the decline can be attributed to a confluence of factors, primarily characterized by low volumes and escalating prices. In response, dealerships can explore promising avenues such as Finance and Insurance (F&I) products, offering tangible value to customers while enhancing profitability. Furthermore, diversification emerges as a critical strategy, allowing dealerships to broaden their revenue streams across a more extensive customer base. This shift mitigates reliance on a few high-margin sales, paving the way for a sustainable and profitable future.

Source: Experian Automotive VIO as of September 30, 2023 (all motorized, road-registered vehicles) | Automotive Market Trends Q3 2023

Sweet Spot Vehicles: A Growing Market and Service Opportunity

The aftermarket “Sweet Spot” flourishes, boasting a volume of 103.2 million with projected growth until 2026. Within this sweet spot, vehicles from model years 2012 to 2018 show a notable 4% increase from 2022 and a significant 22.9% surge from 2019. This scenario highlights an opportune market. These vehicles are advantageous for dealerships due to their position beyond general OEM warranties, primed for additional services.  Moreover, as these vehicles age, the likelihood of requiring part replacements and services increases. As a result, this provides a chance for dealerships to cater to sweet spot vehicle owners through their service departments. This ensures a steady stream of revenue and establishing a meaningful connection with a growing market segment.

Staying Road-Ready for Dealership Success in 2024

Preparation for 2024 demands a strategic focus on productivity, sales growth, and enhanced profitability within pivotal profit centers like F&I and Service departments. In addition, staying attuned to dynamic industry trends is crucial. Ensuring personnel are equipped with the latest industry knowledge and skills through continuous training. Cultivating a culture of ongoing learning and training positions the dealership for success as the journey toward 2024 unfolds.

Steering Dealerships towards Success in 2024

In the dynamic landscape of 2024, it’s crucial for dealerships to adapt and thrive. We are deeply attuned to the industry’s specific challenges and trends. Leveraging our specialized expertise, we stand as a pivotal strategic partner, uniquely positioned to guide you through these dynamic changes in the automotive world. Connect with us to explore how we can bring decades of experience, crafting a tailored Profitability Improvement Plan. We are prepared to work with you to elevate your dealership’s success in the coming year. Let’s navigate the road to prosperity together.

Data and charts credit: Experian

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