BLOG

Can Self-Service Tools Save the Auto Industry?

January 20, 2023
by
Maili Neverosky

If you’re in the auto-sales business, 2022 might be a year you’re eager to forget. The past 12 months were the worst in over a decade for auto sellers, with sales plummeting as buyers struggled with inflation, soaring interest rates, and a stuttering economy. 

With supply chain jitters and chip shortages continuing, meanwhile, auto prices remained sky-high, leaving dealerships (which operate on low margins) with little room to boost sales by discounting. Those issues could take years to resolve, Kia ops chief Steve Center says. “You won’t see incentives, because we’re still going to be selling everything we can make,” he warns.

With sales down and discounting off the table, what’s the solution for auto sellers? One of the few remaining options is for businesses to differentiate by optimizing for efficiency and customer experience — and that means creatively and effectively leveraging new self-service tools.

A new sales strategy 

Take a look at CarMax, for example. They’ve been hit as hard as anyone by the weak market, with sales falling 28% YOY in Q3 2022, and per-unit profits down 46%. In response, the used-car specialist is fighting to acquire vehicles at lower prices, optimize inventory and pricing, and squeeze new efficiencies out of traditional business processes. 

Unsurprisingly, CarMax’s recovery strategy also includes big cuts to ad spending and tech investments. Tellingly, though, there’s one area where the company isn’t cutting to the bone. 

When it comes to self-service technologies, the auto seller is doubling down and pouring resources into building out “assisted help” and “self-progression” tools designed to help customers to solve problems and find deals on their own.

Why Carmax is betting on self-service

It’s easy to see why CarMax is investing in self-service solutions. Half of their customers already start their sales journey with an instant online appraisal, so there’s clear consumer acceptance of (and demand for) self-service tools. 

Self-service options are good for the bottom line, too. Increased efficiency and shorter transaction times mean associates can step in to complete a sale without holding the buyer’s hand all the way through the sales funnel, sharply reducing the cost of closing deals. By using self-service tools, CarMax is giving itself leeway to boost tight margins — or stay profitable while lowering prices to draw in customers. 

More importantly, the company is also working to improve the customer experience, and investing in omnichannel tools designed to reduce friction and help customers find deals they love. Instead of charging customers less, CarMax wants to give them more, and use self-service tools to boost the value it provides even as it lowers its own cost of doing business.

More storms are coming

Asked by investors what the coming year holds in store, Carmax CEO Bill Nash had a simple reply: "Your guess is as good as mine.” One thing is clear, though: with analysts expecting only modest sales growth in 2023, sellers will have to keep fighting for every deal and every dollar. 

That means auto sellers will need to build for resilience and agility, and to prioritize both efficiency and the customer experience. Self-service tools are a proven and cost-effective way to deliver on both fronts, providing a more streamlined customer experience while freeing sales and support teams to focus on the areas where they can drive most value. 

For auto sellers — and any other business that wants to keep costs low while strengthening customer relationships — self-service solutions are an vital investment, even and especially during these challenging economic times.