We've all seen the significant impact the global pandemic has had on various sectors, and the automotive industry has been no exception. From the initial supply chain disruptions to the subsequent surge in used car prices, we've had to adapt to a rapidly changing landscape.
The Current State of the Auto Market
The auto market is currently experiencing a significant shift. Earlier this year, experts predicted a decline in car prices for 2023. Now, halfway through the year, we're seeing this prediction come to fruition. According to a report from CarEdge, used car prices are starting to come down, and this trend is expected to continue, with prices normalizing by the end of the year.
However, declining prices aren't the only change impacting the auto market. There's been a worrying increase in car repossessions. A report from National Transport Services indicates that car repossessions have been on the rise in 2023, due to factors such as financial hardship, job losses, inflation, and increased auto loan default rates. Furthermore, a detailed report from Find The Best Car Price states that subprime auto repossessions are up 11% from 2020, and auto loans originated in 2021 have a delinquency rate of 0.67% in the sixth quarter after origination, which is 13% higher than the delinquency rate of auto loans originated in 2018.
These trends present new challenges for dealerships. As prices continue to decline and repossessions increase, it's crucial for dealerships to find ways to maintain sales volume and profitability.
The Power of Social Media Advertising
One effective strategy for navigating these changes is leveraging the power of social media advertising. Despite the fluctuations in the auto market, one thing remains constant: customers are still on social media. Platforms like Facebook and Instagram offer a valuable opportunity for dealerships to reach potential customers and generate leads.
At TECOBI, we've invested millions in Facebook advertising on behalf of our clients, generating leads for car dealerships across the country. Despite the market changes, the cost-effectiveness of these leads has remained remarkably stable. In January, the Cost Per Lead (CPL) was $6 per lead. By June of 2023, it had only risen slightly to $6.97. This minimal increase in CPL demonstrates the resilience of social media advertising as a solid source of traffic for car dealerships, even in a fluctuating market.
We've helped our clients generate customers by showing the most compelling inventory and vehicle specials to people located near their dealerships. Our text messaging software then helps dealerships nurture those leads by communicating at a massive level. You can learn more about our approach in this blog post.
One of our clients, Mac Haik Chevrolet, one of the highest volume Chevrolet dealerships in the country, has seen great success with our approach. They've been able to maintain volume sales, even in the face of the current market changes. You can read more about their experience on our testimonials page.
The Role of TECOBI in Your Dealership's Success
At TECOBI, we're committed to helping our clients navigate the changing auto market. Our solutions are designed to generate high-quality leads that convert, helping dealerships maintain sales volume and profitability.
We've seen great results with our approach. In a case study conducted by Facebook, we found that optimizing for conversion leads and integrating the Facebook Conversions API resulted in a 68% higher conversion rate and an 8% lower cost per qualified lead.
As the auto market continues to evolve, we're here to help dealerships adapt and thrive. If you're interested in learning more about how TECOBI can help your dealership navigate the changing auto market, I invite you to get a demo today!