When Others Retreat, Your Automotive Business Can Shine!
Taking automotive market share, your ever-evolving customer, and who moved your cheese...
“The time to buy is when there's blood in the streets.”
If you’re starting to feel the pinch… if you’re thinking about pulling back on marketing, advertising, events, customer perks, new upgrades for the shop… remember that “the time to buy is when there’s blood in the streets.” This is the hardest thing to do (trust us, we get it) but, it works.
You see, when the market is bustling, and everyone's at the top of their game, it's a level playing field. But when challenges arise and the majority start to retreat, that's when the real game begins. It's not when your competition is at their sharpest that you have the best chance to surge ahead, but rather when they've let their guard down or pulled their spending back. And right now, as many pull back, the stage might be set for you to make your most impactful moves.
Imagine a marketplace where your competitors are reducing their advertising. Suddenly, the airwaves, the trackside billboards, the digital and social spaces are less cluttered. Your message, if you choose to amplify it, can resonate louder and clearer. It's akin to being the only voice in a quiet room, where every word you utter commands attention. Or the only car set on kill when everyone else pulls some timing to keep it together for another race.
More importantly, think about the market share that's up for grabs. Every automotive shop that decides to pull back leaves a void; a space that's waiting to be filled. By pushing forward, even if it's with cautious optimism, you have the chance to occupy that space, to welcome new customers, and to solidify your position in the market.
The landscape of the automotive business is ever-changing, but one thing remains constant: challenges are cyclical. By investing in your business now, when many are hesitant, you're not just positioning yourself for success today but laying a robust foundation for the inevitable upswing… whenever that may be…
Your Customer Has Changed
Despite data that would suggest the automotive aftermarket is chugging along at a 5-10% growth rate, most independent shops and industry support companies are down 15-40% YOY. If that’s you, you might be wondering what the heck is going on out there. Our working theory is that your customer has changed buying habits dramatically. In the “money is free” phase of covid, our industry enjoyed growth rates of 30-50%, but the fuel that was feeding that is gone. In its place, we have inflation rates that are putting a death grip on the economy and sucking that extra money right out of your customer’s pockets.
On top of that, household incomes are falling, economic indicators are not good, and we’ve been in some sort of inflation for months. Water cooler conversations have us rewatching “Big Short” as the data around the commercial real estate market is coming into play. Paying attention to collector hobbies like high end watches tell us that those luxury markets are starting to see the effect with decreasing prices and/or items not moving as briskly as just a year ago.
You will see this in decreased parts sales, orders with less accessories or less add-on options, a smaller attendance at your event, decreased lead times at your speed shop, and your sales department outside chain smoking. The punch line is that your customer has been forced to change their buying habits, and we need to move quickly to figure this out. The adjustment that needs to be made is that it’s not 2019 all over again, and it’s not post-Covid… it’s something else. We won’t know until the trade shows hit and the Q1 2024 order books start getting filled out.
We need to identify this new phase of your customer’s life. The market may be split with big money guys still there but a little bit tighter on the budget as they “wait and see” as well as a second group trying to cope with day-to-day expenses. There are still great opportunities for your whales (big money car builders, speed shops that cater to premium products, etc.), but you need to hustle. Make sure you are on their radar, make sure you are reaching out to them, make sure you are making them feel special. Did you do a YouTube video on that two-year build you just finished? That might be just what it takes to get them (or their whale buddy) to jump to the next level of mods. Premium customer service is critical to this group: You can’t afford to lose a single customer from this contact list.
The other possible market that is taking shape is the guy/gal who just can’t afford this hobby at the same rate they had been enjoying it for the past three years. Don’t give up on these folks. There’s still hope. Because, as you know, once you start playing with cars, you never stop. You need to think about their needs with a lower budget in mind. Find offerings for them that aren’t as expensive but could still be as profitable for you in volume. Look to bundle parts and service for them. Your purchasing department may need to find new lines of product that are more affordable. If they want a power adder, and they can’t afford that $10,000 supercharger, you need to introduce them to nitrous oxide. Yes, it’s a shift down market with this type of customer, and you need to get there before they do park the car for a decade.
The market is changing, your customer has moved, and you need to hustle to find them. You know your customers better than anyone in the industry. Reach out to them (in whatever format they prefer), and remind them how much fun you can have modifying a car. Good luck.
Book Club
The theme of this issue is change. And dealing with change is… inevitable. But how you react to that change, well, that’s up to you. Check out Who Moved My Cheese if you want to learn more.
Gadget of the Week
Who Moved My Cheese (Slicer). Sticking to our “cheese” effort, of course we searched for a car-themed cheese slicer. However, we could only come up with this precise little number. We hope that as you section your finally-aged chiz that you do it with absolute precision and consider the changing market with every slice.