After years of trials and disappointments, dealers want to know what the auto retail industry will look like in 2023. His JD Power, a consumer research firm, is at the forefront of market forecasting, paying particular attention to market trends in 2022. Tyson Jominy, the company’s vice president of data and analytics, joins Inside Automotive host Jim Fitzpatrick to explain what dealers should be preparing for in the coming months.
One of the main features of 2022 was its unpredictability. Major players in the automotive sector, including online used-car retailer Carvana and domineering EV giant Tesla, have seen the gap between them and their competitors close. Auto industry executives were optimistic about the potential for EV sales this year, but were quickly disappointed when increased production failed to win over customers. If dealers are to do anything to prepare for 2023, Jominy says they need to expect the unexpected.
Production remains weak, but improved supply chains and normalized consumer demand have allowed dealers to slowly rebuild inventories. This is a key factor in combating scarcity and high prices. Jominy believes this trend will be seen among auto retailers throughout 2023, barring a major global event.
Dealers had to get creative for 2022. Record car prices and fears of a recession kept many buyers at home. To attract consumers, dealers have offered discounts and promotions on financing, insurance, maintenance, and more. Jominy doesn’t discourage the practice, but urges dealers to wait to use certain incentives until they can see what 2023 has in store for them. “You need a reliable gunpowder keg to reflect price changes quickly,” he explains.
“There is a demand for 3.4 million units in this industry,” said Jominy. While many retailers fear a recession in the first quarter of 2023, he is unlikely to lose consumer interest even if the economy shrinks. Since 2020, many drivers are putting off buying a coveted car. While it can’t completely insulate your business from financial hardship, it can help auto retailers stabilize the flow of customers in-store to keep them in business.
The auto industry has scaled back some of its forecasts for 2023, but many agree that anything could happen in the coming months. However, many companies such as JD Power believe recovery is still possible. Jominy recommends that dealers focus on customer retention, do what they can to combat price increases now, and wait patiently to see exactly what happens next year. The sacrifices companies are making now will pay off well after the market fully recovers.
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