A Micro-Chip Shortage Will Impact Supply – Does It Have to Disrupt the Consumer Shopping Experience?

A Micro-Chip Shortage Will Impact Supply – Does It Have to Disrupt the Consumer Shopping Experience?

Steve Smythe's Headshot

Camarillo, Calif., April 20, 2021

As we’re about to enter year two of the COVID-19 pandemic, the auto industry is facing a continued production and supply challenge stemming from the pandemic, but not because factory workers are being told to stay home.

This time around, a shortage of semiconductor chips, which are also used to build other consumer electronics in high demand, are causing supply backlogs for the production of new vehicles.

The Latest on Semiconductor Chip Shortage

Semiconductor chips today are a critical part of the vehicle build process. The chips are used in everything from engine management systems, bluetooth, road navigation and collision-detection systems, and – remarkably – they can comprise as much as 40% of a new car’s cost, according to Deloitte1.

Research firm, AutoForecast Solutions, recently increased its estimate of the number of cars and trucks that will not be produced because of these supply problems.

Globally, the forecasting firm said that the automotive industry had already announced volume cuts totaling 680,350 vehicles — up from 202,000 vehicles in January. The firm also believes that number may increase to 1,321,701, as additional auto plants and their supply partners run out of chips; as many as 338,822 vehicles are expected to fall out of North American production plans2.

How a Chip Shortage Affects Car Shopping

The shortage will make accurate incentives and rebate setting more challenging for the manufacturers. In turn, dealers will struggle with how to set prices and payment offers as a result. Finally, for consumers it can be expected that the shortage of supply will result in increased MSRP’s.

Even before the pandemic and chip shortage, one of the major concerns among consumers was their inability to shop for a car online and seamlessly complete the transaction at the dealership. Consumers simply don’t understand why the monthly payment they were quoted online is different when they get to the store.

In fact, a recent survey we conducted revealed that 43% of consumers are frustrated that their online offer is different from what they are presented with at the dealership. This is important because 21% of shoppers say they walk away from a deal when this discrepancy is $50 or more per month; this number quickly jumps to 48% when the difference between what is quoted online and in the store is $75 a month.

For dealers who are not using technology solutions that empower them to provide identical price quotes online and in the store, nearly half of their car shoppers will walk away because the payments offered at the store are different from what they were offered online!

How Will Chip Shortages Impact Manufacturers’ Incentive Programs

Payments quoted to consumers are often shaped by manufacturer incentives and rebates, and the new chip-driven supply challenges will only exacerbate the inexact science manufacturers use in determining these.

Manufacturers spend billions of dollars each year on incentives to move inventory to achieve a desired market penetration. Traditionally, the car makers go through a labor-intensive process to analyze the data related to the effectiveness and impact of the incentive and rebate programs they are offering. This is done to determine how best to position themselves competitively – and to determine how much they have to spend to earn their desired market share.

The process is time consuming, mechanical and unsophisticated. Decisions are often made on gut instinct – without having all of the facts. Not only is this very expensive (and seldom accurate), it is also not timely and provides openings for competitors to step in and win market share.

Almost every dealer in the country has experienced an inability to collect rebate and/or incentive monies from their manufacturer because of the misapplication or improper combination of rebates. When this happens there are two options: Rewrite the contract, which always upsets the customer, or take the difference out of the gross.

The data and technology platforms needed to overcome this are available, all of which will greatly enhance the customer experience. Manufacturers, lenders and dealers can now be seamlessly tied together in a complete system that offers a portal and a dashboard containing all pertinent data necessary to build, offer and transact. This technology includes a solution that mines, analyzes and manages the billions of combinations and iterations of all lender and manufacturer programs available in the marketplace and finds truly superior, scientifically perfect solutions for all stakeholders: consumers, dealers, lenders and manufacturers.

Furthermore, today’s best and most comprehensive solutions enhance the consumer experience and the showroom process by electronically presenting all payment and purchase options to customers with full compliance and transparency – on any computer, tablet or mobile device – at any/all points along the consumer’s shopping journey. As a result, the process can dramatically shorten transaction times, raise dealership efficiencies and margins, and elevate customer satisfaction as a result of a more streamlined process.

With these new technologies available to the entire automotive eco system, all parties involved can quickly adapt to changes caused by a disruption to supply – without compromising the optimal shopping experience for the customer.

Written by Rusty West, President and CEO of Market Scan Information Systems.

  1. https://www2.deloitte.com/content/dam/Deloitte/cn/Documents/technology-media-telecommunications/deloitte-cn-tmt-semiconductors-the-next-wave-en-190422.pdf
  2. https://www.autonews.com/manufacturing/new-forecast-13-million-vehicle-loss-microchip-shortage

For additional information, articles or interviews please contact:
Market Scan at info@marketscan.com

Market Scan was founded in 1988 by Father-Son team Russell and Rusty West with a single vision: build a world-class desking platform to fit every customer’s financing and leasing needs like a driving glove while returning the highest profit margin possible to the dealership.

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© 2019 All rights reserved.
Market Scan Information Systems, Inc.

 

How All Components Are in Place for Automotive Digital Retailing in 2021

How All Components Are in Place for Automotive Digital Retailing in 2021

Steve Smythe's Headshot

Camarillo, Calif., April 20, 2021

It is certainly an understatement to say the world has been turned on to online shopping and digital retailing. According to Adobe Analytics, during the 2020 Black Friday event, online sales increased 22% over the previous year. What’s more, the National Retail Federation expected this year’s online holiday sales totals would increase 20% and reach $202 billion1.

The Automotive industry is experiencing this same phenomenon, much of it fueled by the shelter in place orders associated with the COVID-19 pandemic.

Internet Shopping is Now Normal

Particularly for younger car shoppers, digital retailing has increasingly grown in popularity. According to McKinsey, less than a third of younger consumers today want to shop for their next car in-person at the dealership, and a larger number of these individuals are interested in contactless service as well2.

Furthermore, according to Cars.com, 48% of consumers today would like to handle price negotiations online, and another 42% say they want to handle financing online, including being able to obtain accurate payments online3.

In order to truly deliver the optimal automotive retail experience for consumers in an online environment, there are many components that must be artfully tied together to deliver consistent, transparent messaging for every step of the customers’ journey.

Automotive Retailers Are Ready

Expedited by COVID-19, the automotive retail ecosystem is currently undergoing its own shift toward a more consumer-friendly model that promises to mimic the convenience of online shopping found in many of today’s popular Internet retail portals. To successfully tap into this ecosystem and deliver on this promise, the industry is beginning to leverage science, technology and data to create a frictionless automotive shopping experience.

One key is certainly data. The industry has plenty of data that can tell you what the trends were 90 days ago; perhaps even statically advise what is available for a particular circumstance. Yet, all of that data without science is just noise. Now, however, there is a platform that ties together all the pertinent data points necessary to arrive at a scientifically perfect, transact able solution for your customer. After all, there’s a reason why the windshield is much larger than the rear-view mirror. Today, the industry has access to the most powerful analytics platforms ever created to make educated, tactical and profitable decisions.

The best solutions today are designed to empower and enable dealerships to excel in digital retailing and revolutionize the way manufacturers and lenders construct offerings to win market share – without overspending.

The Technological Ecosystem

What’s empowering and driving this ecosystem of digital retailing for automotive is a comprehensive database containing every parameter, policy and factor that can influence an automotive sale or lease transaction – every lender program, every manufacturer rebate and incentive, every municipality tax and fee and every term and condition under which each dealership is willing to transact. Additionally, today’s trusted platforms enable the seamless representation of all five major automotive sectors required for a successful transaction, online or in-store:

  • Manufacturer: Every model and trim offered by every manufacturer; all respective incentives and rebates including compatibility and “stackability” rules, as well as VIN-specific, option package specific, regional specific and dealership specific targeted offers.
  • Lender: Every published program offered by each lender in the country, including all parameters, policies and factors that can influence any automotive transaction.
  • Dealer: Each dealer’s individual selling price rules, lender relationships, fees, reserve policies, and all other required terms and conditions.
  • Municipality & Government: All STATE, COUNTY, and LOCAL laws, rules, regulations, calculation methodologies, tax percentage rates and registration fee and DMV calculations.
  • Consumer: All consumer credit bands – and how those are segmented and considered by every manufacturer and Lender.

Pulling All the Pieces Together

Dealers, lenders and manufacturers all need to be seamlessly tied together in a comprehensive system that offers a dashboard and a portal of all pertinent data necessary to build, offer and transact. This technology includes a solution that mines, analyzes and manages the billions of combinations and iterations of all lender and manufacturer programs available in the marketplace and finds truly superior, scientifically perfect solutions for all stakeholders: consumers, dealers, lenders and manufacturers.

Furthermore, today’s best and most comprehensive solutions enhance the consumer experience and the showroom process by electronically presenting all payment and purchase options to customers with full compliance and transparency – on any computer, tablet or mobile device – at any/all points along the consumer’s shopping journey. As a result, the process can dramatically shorten transaction times, raise dealership efficiencies and margins, and elevate customer satisfaction as a result of a more streamlined process.

With these new technologies available to the entire automotive value chain, digital retailing is poised to see a tremendous lift in 2021.

About The Author: Rusty West is President of Market Scan Information Systems and has more than three decades worth of experience developing leading data and technology-based solutions for the automotive industry. For more information please visit www.marketscan.com.

  1. https://www.wsj.com/articles/black-friday-was-a-bust-for-many-stores-better-for-online-11606676355?mod=article_inline
  2. https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/how-consumers-behavior-in-car-buying-and-mobility-changes-amid-covid-19
  3. https://www.cars.com/articles/ride-sharing-drops-online-car-shopping-increases-in-coronavirus-wake-419581/

For additional information, articles or interviews please contact:
Market Scan at info@marketscan.com

Market Scan was founded in 1988 by Father-Son team Russell and Rusty West with a single vision: build a world-class desking platform to fit every customer’s financing and leasing needs like a driving glove while returning the highest profit margin possible to the dealership.

Market Scan Vertical Logo - White

© 2019 All rights reserved.
Market Scan Information Systems, Inc.

 

Market Scan elevates its service and support levels extended to OEM and Lenders

Market Scan elevates its service and support levels extended to OEM and Lenders

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For Immediate Release

Camarillo, Calif., April 2, 2021 – Market Scan Information Systems, Inc., an automotive industry-leading SaaS/PaaS enterprise solutions and data provider, continues to expand its offerings to automotive OEMs, lenders and credit unions.

“As a company, we are entering a very exciting phase. The last year has demonstrated the importance of providing integrated solutions for all stake holders in our industry,” said Rusty West, President and CEO of Market Scan Information Systems, Inc. “As we continue to expand our partnerships with OEMs, lenders and credit unions, we will be dedicating new and additional resources for our enterprise clients. We are committed to ensuring they receive fantastic and unparalleled support to benefit fully from our competencies and business analytics’ solutions”.

As part of the increased focus on providing superior support to OEMs and lenders, Jose Galvan has been promoted to Head of Data Partnerships. In this new role, Jose will be responsible for the development and management of Market Scans’ data partnerships in the United States.

“Given his experience, industry knowledge and particular skillset, I am excited for Jose to take on the newly created position as Head of Data Partnerships, for which he is an ideal fit”, West added. “Jose started out as a Data Analyst for us in 2000 but was promoted several times, culminating in the role of Chief Data Officer. Appointing Jose to this position demonstrates our commitment to successfully expand our collaborations and partnerships with our core enterprise clients“.

During Jose’s tenure as Chief Data Officer, Market Scan developed a highly sophisticated data aggregation and ingestion system and launched the industry’s most complete and complex rebate and incentive matrices for every OEM and their DMAs.

“I have had the great fortune to have been involved in all facets of developing and refining our data management. The database and enterprise solutions we have developed over the past 10 years are truly outstanding and enable our partners, among other things, to optimize their market position with laser-like precision”, said Jose. “I very much look forward to expanding our partnerships; the digital era and todays discerning consumers’ shopping habits and preferences warrant enterprise collaborations and solutions, unlike what we have seen in the past”.

Market Scan’s data and calculation technologies are widely accepted industry-wide as the most complete and reliable, supporting services and solutions across the entire industry ecosystem. The company’s client roster spans the gamut in the automotive industry from “single rooftop” retail stores to industry leaders, including partnerships with General Motors, Dealer Inspire, Roadster, Tekion and FRIKINtech, among others.

To learn more about Market Scan, visit www.marketscan.com

 

Contacts:

Carsten Preisz
Market Scan Information Systems, Inc.
1-805-823-4266
cpreisz@marketscan.com

 

 

About Market Scan

Market Scan is a leading provider of technology and analytical solutions for the automotive industry.  The company’s proprietary technology and analytics mine value from vast amounts of data to enable efficient, frictionless and scientifically accurate transactions.  Market Scan’s solutions facilitate easier, more complete, competitive and accurate results, enabling automotive dealers, lenders and manufacturers and technology companies to provide better products, experiences and profitability to serve customers and gain market share.  For more information, call 800-658-7226 or go to www.marketscan.com

 

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For additional information, articles or interviews please contact:
Market Scan at info@marketscan.com

Market Scan was founded in 1988 by Father-Son team Russell and Rusty West with a single vision: build a world-class desking platform to fit every customer’s financing and leasing needs like a driving glove while returning the highest profit margin possible to the dealership.

Market Scan Vertical Logo - White

© 2019 All rights reserved.
Market Scan Information Systems, Inc.