The automotive industry has proven itself over decades to be highly influenced by global events and economic conditions. Major developments on the world stage have historically caused immense fluctuations in consumer confidence and vehicle demand, sending ripples felt by local car dealerships everywhere. It is critically important for those in the automotive business to closely understand and track this correlation between global events and local sales volumes. By keeping a pulse on emerging world developments that can potentially impact the car buyer psyche on a broad scale, dealerships can try to mitigate declines and capitalize on positive trends.
Even occurrences that feel disconnected from the average consumer can spark economic reactions affecting auto purchases. As we have seen time and time again historically, global events have extensive reach into local economies everywhere.
Factors like consumer sentiment, access to financing, commodity prices, technological innovations and more can be dramatically swayed by major world events. In turn, these fundamentals that determine market conditions for big ticket items like automobiles can be shaken up, for better or worse.
For example, breakthrough technologies like the advent of electric vehicles have sparked immense interest and demand growth despite high price tags. Similarly, positive geopolitical events like the end of the Cold War bringing a 1990s expansion created positive tailwinds.
On the other hand, recessions, conflicts, supply crises and more can quickly deflate consumer confidence and dry up lending resources critical to buoying sales at dealership lots.
It is critical that dealers have a solid understanding of the primary global inputs that drive local demand for the high cost, high consideration purchases they depend on. Tracking world events provides integral market context.
While negative developments understandably occupy much of the focus when examining global events’ impacts on auto sales, positive influences certainly exist as well. These typically revolve around technological innovations or economic boosts.
Some examples of potential positive impacts from global events and trends include:
As history has shown, periods of innovation, cooperation, credit access and optimism have brought great fortune for auto dealers catering to customers ready to make major purchases. While external factors, capitalizing on these global tailwinds starts with understanding indicators.
As described prior, negative global events often receive the bulk of attention for their sales-deflating aftermath in automotive and other consumer focused industries. Hopefully understanding the major factors at play can help dealerships brace through uncertain times.
Some of the most impactful examples of negative global event influences include:
The complex mix of economic and psychological factors typifies why global event ripples infiltrate local dealership lots so rapidly and painfully. Many repercussions tend to linger as well compared to other discretionary purchase categories. Identifying shifts as early warning signs remains essential.
Examining major historical correlations shows just how extensively global events and market developments translate to local auto dealership sales trends.
By charting figures over decades, some distinct cause-and-effect patterns stick out:
This indicates the historical precedence of global headwinds and tailwinds affecting purchasing dramatically when it filters to the local dealer level. Other examples like regional wars and technological achievements resulting in product innovations reveal similar extensive reach. Tracking key indicators remains pivotal.
While individual dealerships cannot directly control global economic and geopolitical conditions impacting their sales volumes, keeping a pulse on market environments can empower smarter strategies. The data shows investing time regularly to monitor global developments and events can provide an invaluable window into sales forecasting while illuminating risks and opportunities early enough to pivot business plans accordingly.
While the adage to “think global, act local” is cliche, it resonates given the extensive data showing global events transform local automotive sales radically for better and worse. There are always lessons to be learned though for dealerships striving to grow market share through the turbulence.
In an increasingly interconnected global economy, local automobile dealership sales have been shown to correlate heavily with external world events and marketplace developments. Technological breakthroughs, geopolitical shifts, economic expansions/contractions and more can set off demand swings that appear on Main Street dealer lots in short order.
Recognizing historical precedents where global phenomenon have sparked immense consumer response is crucial context for business planning and forecasting. Tracking leading indicators in real-time enables dealers to foresee potential sales impacts before they fully materialize. While challenging to mitigate external volatility entirely, contingency planning and adaptive capabilities ultimately allow dealerships to better navigate the global wave impacts.
