The 2019 Audi e-tron is among the electric vehicles that have exceeded the 200-mile-range mark in time to entice Memorial Day buyers. 
 - Photo courtesy Audi USA

The 2019 Audi e-tron is among the electric vehicles that have exceeded the 200-mile-range mark in time to entice Memorial Day buyers.

Photo courtesy Audi USA

For many people, Memorial Day weekend marks the start of summer vacation season, but for dealerships, it’s all business. The holiday weekend is typically a huge three-day sales stretch for autos, and this Memorial Day will be even more important due to the state of the industry. Every sale matters.

As dealers prepare for the big weekend, a few overarching trends specific to this year will be shaping the market and consumer behaviors. Dealers should keep a close eye on these three factors when preparing for holiday incentives and beyond.

1. Looming External Factors

Gas prices are climbing with national averages heading toward $3 a gallon, AAA data shows. This year, dealerships may have more help on their side when it comes to offering alternatives to consumers looking for relief.

While EVs have been slow to catch on, the newest models have ranges of 200 miles or more on a full charge. Tesla, which has dominated the EV segment, is being joined by the Chevrolet Bolt, Jaguar I-Pace and Audi e-tron with this longer range. Kelley Blue Book research indicates this could ease “range anxiety” and open the door for consumers to give these vehicles a serious look.

The recently renewed threat of 25% tariffs on imported vehicles and parts is another big risk factor for 2019 sales. These tariffs have the potential to cause new vehicle prices to increase. Even if a vehicle is built in the U.S., it will have parts imported from various countries. The auto industry is too globally connected for any automaker to avoid being connected to these higher prices from tariffs. Watch closely and be prepared should tariffs put upward pressure on new-car prices.

2. Strengthening Used-Car Consideration

According to the 2019 Cox Automotive Car Buyer Journey Study, nearly two-thirds of car shoppers (64%) are now leaning toward a used vehicle. This should come as no surprise as new vehicle prices continue to increase and push consumers into the used-car market for an affordable option. Used-vehicle sales saw a 4.5% year-over-year lift during April 2019, according to the Manheim Used Vehicle Value Index.

Memorial Day shouldn’t be focused solely on new-car sales. Paying close attention to used cars and touting certified pre-owned programs will be crucial to protecting your bottom line. CPO vehicles are gaining popularity since they offer the same protections as purchasing a new vehicle, but at a more affordable price. Your sales team must tout new and used options equally to make the most out of this holiday lift.

3. SUVs Remain Hottest Segments

One trend that isn’t changing is the demand for SUVs. Consumers are heavily leaning toward purchasing SUVs, instead of sedans. According to Cox Automotive data, the two best-selling segments in April 2019 were compact and mid-size SUVs, which accounted for a third of total vehicle sales.

Dealers need to ensure they have the correct inventory on their lot, including a good mix of SUVs, to meet customer expectations ahead of Memorial Day. And if the current crop of SUVs isn’t right, more options are on the way, including all-new or redesigned versions of the 2020 Ford Explorer, 2020 Porsche Cayenne Coupe, and 2020 Hyundai Palisade. Memorial Day will be crucial for dealers to move the 2019 models off their lots and make way for 2020 models hitting the market later this year.

Memorial Day weekend is historically big for the auto industry, providing dealers a prime opportunity to capitalize on warmer weather and extra shopping time for consumers. To set the stage for the rest of 2019, dealers should keep an eye on the gas prices and tariffs while making the most of consumer interest in SUVs and used vehicles.

Matt DeLorenzo is senior managing editor of Kelley Blue Book (div. Cox Automotive).

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