The Impact of Global Events on Local Automobile Dealership Sales

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.

The Extensive Reach of Global Occurrences

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.

Potential Positive Global Impacts on Local Auto Sales

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:

  • Electric & Alternative Technology Advancements: Tesla’s ascent has correlated with skyrocketing interest in EVs from traditional automakers and consumers alike. Further innovations and milestones in overcoming range anxiety, battery limitations and right-sizing affordable options could dramatically stimulate auto demand.
  • Favorable Geopolitical Developments: The end of large global conflicts or breakthrough diplomacy paving new international cooperation often ushers in increased stability and economic expansion. Consumer optimism and lending appetite tends to rise after prolonged recessions or downturns as well.
  • Stock & Lending Market Rallies: Bull runs and expanded access to financing obviously provide major sales catalysts that dealerships can capitalize on through smart inventory and marketing strategies.

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.

Potential Negative Global Impacts on Local Auto Sales

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:

  • Recessions & Financial Crises: By far the most devastating and consistent triggers of automotive sales declines, major financial contractions directly undermine consumer capability and confidence for dealers and automakers alike. Access to affordable financing can dry up almost instantly following market shocks.
  • Geopolitical Conflicts & Uncertainty: Regional conflicts and political upheavals frequently correlate to reduced discretionary spending as consumers grow anxious about stability and economics. This also disrupts distribution chains as well. Wars and unrest historically siphon auto sales.
  • Commodity Supply Disruptions: As we’ve seen with major oil shortages and embargoes, any spikes or shocks shrinking available resources critical to auto manufacturing leads to soaring prices and lean inventories. This has a major dampening effect on auto purchases.
  • Stock Market Declines & Contractions: Even more psychologically versus directly impacting affordability, stock plunges often shake consumer sentiment to curtail big ticket items. This compounds with factors like financing contractions.

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.

Historical Global Event Impacts on US Auto Sales

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:

  • 1970s Oil Price Shock & Shortages: Sales crater over 30% from 1978 peaks by 1982 recession trough. Does not recover 1978’s figures again until late 1980s.
  • 1990s Bull Economy After Cold War: Auto sales climb over 90% from 1991 to 2000 thanks to lending access, lower oil costs, and exceptional consumer optimism.
  • 2008-2009 Financial Crisis: New auto sales plunged nearly 40% just in 12 months from 2007-2008 thanks to credit market freeze. Hits lowest volume since 1982.
  • 2020-2021 COVID-19 Pandemic: Complex supply and demand shock sees whipsawing effects. Sales recover quicker than prior recessions but still linger at times below 2018 peaks into 2023+.

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.

Takeaways for Local Automobile Dealerships:

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.

Specifically for dealers, some recommended best practices include:

  • Watch Leading Indicators Daily: Keep tabs on market indexes, consumer metrics, geopolitics, tech innovations etc. with potential to catalyze auto demand shifts when trickle down effects hit Main Street.
  • Have Contingency Plans: Be prepared tactically for sudden positive and negative global event fallout. Have strategies for balancing advertising, inventory orders and staffing.
  • Emphasize Agility & Adaptability: Dealers succeeding through global crisis events were ones able to respond quickly to radically changing conditions and consumer behaviors through the peaks and valleys.

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.

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