The NADA Way

Every year, dealers and other industry attendees from across the United States converge for a week in February to discuss the latest trends and business opportunities on the dealership side of the automotive industry. This year, the National Auto Dealers Association (NADA) conference was held from February 1st to 4th in Las Vegas, Nevada, on the heels of another successful CES the month before. With nearly 15,000 dealerships in the US alone, this is the most important convention of the year for automotive dealers, and the information presented by attendees and exhibitors at the conference indicate the health and future of the consumer side of the automotive world. From AI to profit margins and growth, here are a few of the most important takeaways from NADA 2024.?

Following the recent trends in artificial intelligence and large language models across much of the tech and auto industries, dealers at NADA were eager to present AI as a component of the product that is beginning to be offered to customers. In fact, 98.16% of companies in attendance at NADA 2024 promoted AI as a key tool to selling their products. Whether it's the use of consumer-facing ChatGPT on a dealer website or internally to manage a growing demand for vehicles, AI seems to be firmly embedding itself within the fabric of American dealerships. Vehicle buyers constantly demand more streamlined and optimized purchasing experiences when shopping for new cars, and the implementation of AI on a large scale is a cost effective way to streamline the buying process both online and off of the showroom floor. AI is an invaluable tool for reducing costs, maximizing dealer profitability, and improving customer satisfaction, and US dealers are embracing it en masse. As AI technology continues to improve, it will be important to watch how businesses further implement it to bring the car buying experience into the future.

Continuing on the trend of improved customer service, dealers are constantly working to improve the integration between online and in dealership shopping. Since 2000, digital retailing has slowly crept up in percentage of purchasing, but it is nowhere near as prevalent as industry leaders predicted over 20 years ago. Consumers place value on in-person shopping and browsing when it comes to buying a new car, and dealers are working on new solutions to integrate things such as AI on dealership websites with enhanced real life experiences. At NADA, a variety of tech companies were offering software designed to bundle customer data to dealerships with the intent of using it to personalize in person buying experiences to the greatest extent possible. Essentially, the more that personalized online data is integrated into the showroom floor, the better the purchasing experience will be for consumers looking to buy their next car.?

With all of these new advancements and improvements in customer service and experiences, it is of little surprise that dealerships are making record profits in the bullish post-pandemic economy of the last couple of years. Not only was the exhibition packed with attendees eager to return to a convention setting, but dealer profits have soared to 2x-3x pre-pandemic levels. For the four previous years prior to the Covid-19 pandemic, dealerships profits averaged around $2 million per year, but in 2021 and 2022, dealerships doubled that, averaging around $4 million. These numbers indicate a very healthy car buying market and the continued importance of improving the customer experience, because maintaining such a high level of growth will be challenging as consumers demand more and more from dealerships. Doubts about the viability of franchise dealerships appear to be unfounded, as profitability has far surpassed pre-pandemic levels, and consolidation continues among regional dealer networks.

Overall, NADA 2024 provided nearly nothing but optimistic signs towards the future of dealers in the United States. While adapting to EV sales, dealers are investing in new technologies to improve tried and true business models in order to maintain and expand their customer base. In 2024, buyers demand high-tech and integrated dealership experiences, which industry leaders have quickly become wise to, spending great amounts of time, money, and effort to bring their businesses into the 21st century. Only time will tell the efficacy of these investments, but for now, dealerships remain viable and strong, auguring well for the future of the automotive retailing industry.?

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