Last Modified: July 13, 2023

Written By:Meli Taylor

|Published Date: April 6, 2022|6 min read

Surviving the Chip Shortage: Sales & Service Strategies for Dealerships

A man and woman shake hands in front of a white car inside a dealership
The chip shortage has caused a lot of trouble in the automotive industry. If you know, you KNOW, and you can skip ahead to the good stuff. If you don’t, allow us to briefly explain:Due to a number of factors, including the ongoing COVID-19 pandemic and associated labor shutdowns and shortages, demand for integrated circuits, also known as semiconductor chips, has exceeded the current supply since 2020. (Though some experts believe this could improve in 2023.) Products that use these chips such as computers, video game consoles, and cars are in short supply as manufacturers cannot get enough chips to complete production. At the same time, demand for these products remains the same as ever or has even increased in some sectors. This means that there are simply not enough products available to meet consumer needs.Unfortunately, it doesn’t look like the car chip shortage will end anytime soon since manufacturers still cannot get enough chips to produce enough cars to fulfill demand. However, we’ve got some new strategies for car dealerships to help you survive (and dare we say, thrive?!) through the shortage. In order to do this, dealerships can develop unique ways to sell vehicles and retain customers even as car production stalls.In this article, we go over four ways dealerships can get through this down period. These methods include:
  • Buy-back strategies
  • Focusing on used car sales
  • Selling online
  • Investing in customer service and fixed ops
By following the above methods, you can keep your customers happy and grow your dealership, regardless of external factors outside your control.

What the Auto Chip Shortage Means for Dealerships

The biggest issue facing dealerships with the vehicle chip shortage is that demand is greatly outpacing supply. Because of the chip shortage, manufacturers cannot get ahold of enough chips to build new vehicles. At the same time, demand for new vehicles has been increasing. As such, there are simply not enough vehicles available on the market to meet demand from consumers.Because of this, dealerships can develop new ways to meet increasing demand. Additionally, dealerships can focus on using great customer service to retain existing customers even if new vehicle supply is low. The auto chip shortage may hurt the auto industry as a whole, but your dealership can weather the storm and come out on top by implementing the following strategies.

Top 4 Strategies for Growing Your Dealership During the Chip Shortage

Implement new buyback strategies

If your auto inventory is low due to the chip shortage or other reasons, then you can implement new buyback strategies to add more cars to your lot and get customers into your dealership with the right incentives. You can use dealer software such as DealerSocket and Elead to identify which vehicles are best to focus your buyback campaign on and which customers might be ready to trade in. Once you’ve identified the focus of your buyback campaign, you can begin to market it. Here are some strategies for running a successful buyback campaign:
  • Emphasize the deadline. In your marketing materials, make the deadline for the promotion clear. You want to give your customers a sense of urgency so that they don’t miss out.
  • Focus your promotion. Focus your promotion on a specific model or product line that’s hot right now. Then, focus only on the leads that fit the bill. This way you won’t spread yourself too thin and will ensure that the cars you buy back can be sold.
  • Provide flexible incentives. Give used car owners options for incentives. Some may want to trade in for a new car right away; others might be more interested in cash back or a rebate. Make it clear to each owner what the different options are and how each option provides value for their trade-in.
  • Be upfront about terms and conditions. Buying back used cars involves risk. Make it clear upfront what the terms and conditions of your campaign are, including those on vehicle damages, miles, and pricing.
  • Use Covideo’s video reply feature. You can send out a request for videos of used cars with Covideo’s video reply feature. Simply send out a video message asking for a walkaround video featuring the customer’s car so you can check its features and any damages before they bring it in. Best of all, customers can send their video back to you even if they don’t have a Covideo account! See how it works in this video:
Increase Inventory with Video Reply

Double down on used car sales

Buying back old cars will inevitably land you with more used cars to sell, even despite the chip shortage. You can double down on used car sales by planning events for or focusing marketing efforts towards used car buyers. Like with buy back campaigns, it’s best to first identify the leads who would be most interested in purchasing used cars and the specific models in your inventory. Marketing efforts can then focus both on the best models and the best deals for used cars. To maximize your marketing of used cars, you should consider using an auto dealership video creation platform like Covideo Dealer Services. With Covideo, you can send personalized videos of cars in your inventory to leads. Leads are more likely to open and respond to your messages when they include video. They are also more likely to come into your dealership if they have already begun a relationship with a salesperson online and seen a video of their desired vehicle. Covideo is the best way to advertise your used car sales event and encourage customers to visit your lot.
Vehicle Walkaround Burlington Kia

Encourage customers to buy online

Does your car lot look a bit underwhelming right now? Are you running on shorter hours or fewer salespeople than usual? If you’re having trouble selling in-dealership, you can encourage customers to buy online. The prospect of buying online can seem daunting to customers who are used to visiting a dealer and test driving their choice. However, with enhanced online dealership features like video walkarounds and full 3D models of vehicles, customers can feel confident that the car they purchased online is the one they’ve been looking for. You can encourage online sales through special sales events on social media platforms like Facebook. Nowadays, you can host your entire inventory online with all technical details, photos, videos, cost, and financing information. Your customer can even put in their credit information and requested down payment to personalize the car buying experience. You can highlight these features as well as the ease of online shopping when promoting online sales events. Make sure that your salespeople are still available to talk with customers online so that your dealership keeps that special personal touch in the selling process. Take that chip shortage!

Invest in great customer service

While inventory is down, the best way to keep customers invested in your dealership is to provide great customer service. During the car chip shortage, you can promote fixed ops services to keep customers happy and expand your revenue stream. Make it clear to both new and existing customers why your dealership is the best place to get their car serviced. Set competitive prices compared to auto repair shops and include service deals in every sale. Additionally, you can emphasize your technical and mechanical expertise. Remind customers that every car is different, and your dealership knows how to specifically service each car you’ve sold. Be sure to complete service quickly and efficiently—nobody wants to spend a full day without their car! In addition to car sales, you can use Covideo as a customer service video messaging platform. You can use video to communicate with customers about regular maintenance or provide updates for a car that is being serviced. Outside of fixed ops, you can use a customer service messaging platform to communicate with customers when they send in a question or report an issue. Video can be used to discuss financing updates, alert customers about recalls, or offer virtual help with car maintenance. The possibilities are endless with a dedicated car sales video app like Covideo.

Try Covideo today

We’ve barely touched on how Covideo can help your dealership make more sales and satisfy your customers, even beyond the chip shortage. With Covideo, you can send videos directly to your customers through email, text message, or your favorite CRM. When your customer clicks on your video, they are redirected to a video landing page that you can customize or set as an overlay on your website. You can also add clickable CTA buttons to your video so that your customer can schedule a meeting or visit a webpage for more information directly from the landing page. Best of all, Covideo tracks every click so you always know exactly when your customer watches your video.Covideo includes additional special features just for dealerships such as an integration with WheelsTV and a marketing intelligence system that integrates into your DMS. To find out more, schedule a demo with one of our auto sales experts today.

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