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Navigating the Waves of 3rd Party Price Hikes in the Automotive Industry: A Strategic Approach

By: Jamie Szczecina


The automotive industry is grappling with unprecedented challenges, particularly 3rd party price hikes. Manufacturers and dealerships face the dilemma of maintaining profit margins without alienating price-sensitive buyers.



Understanding Price Hikes:


External factors like fluctuating raw material prices, global supply chain disruptions, and increased demand for advanced technologies contribute to escalating costs, forcing 3rd party suppliers to adjust pricing.


Impact on Manufacturers and Dealerships:


Maintaining profit margins becomes challenging, and passing on increased costs to consumers poses risks to customer loyalty, sales, and brand reputation.



Strategies for Navigating Price Hikes:


Reinvesting Advertising Dollars:

  • In the face of challenges, strategic reinvestment of advertising dollars is crucial. Consider allocating funds to:

Digital Marketing and Online Presence:

  • Strengthen online presence through targeted digital marketing campaigns. Invest in SEO and social media advertising to reach a wider audience.

Education and Transparency Campaigns:

  • Launch educational campaigns to inform consumers about industry challenges and reasons behind price adjustments. Emphasize transparency in pricing to build trust and credibility.


During our analysis of market trends and data, we've observed significant shifts. The COX Economist data, as depicted in the accompanying image, paints a comprehensive picture of the current automotive landscape.


Leads and Trends:


AutoTrader and KBB leads have experienced a year-over-year decline, with some markets showing an upward trend from October. Credit applications processed through DealerTrack have decreased by 14%.


Service Appointments:


Service appointments remain relatively stable, hovering around the same levels.


Search Volume and Model Preferences:


CarGurus search volume, broken down by market, reveals an overarching trend of fewer shoppers, averaging a decline of 5-10%. However, specific models have seen a more significant drop, some up to 20%. Interestingly, the McLaren GT has seen an increase in interest.


Popular Searches:


The F-150 and Silverado stand out as the leading searched used vehicles across all markets.


CarGurus Acquisition Alert:


Keep a vigilant eye on your CarGurus traffic. The recent acquisition of CarOffer for $75M might have influenced their Google Pay Per Click advertising strategy, potentially resulting in fewer shoppers on their site and interacting with your inventory.


Check Your Exposure:


Use www.isearchfrom.com, enter your Country and City, and search for a vehicle as a customer would. This will reveal which 3rd parties are investing in sponsored or paid Google ads. Run multiple searches for consistency.


Marketing Dynamics:


AutoTrader maintains consistency in paid marketing efforts, but lead volume is down. Similar trends are observed with CarFax and other 3rd party listings.

The automotive industry is at a crossroads, necessitating strategic measures for sustainability. By optimizing supply chains, diversifying suppliers, embracing efficiency and innovation, and reinvesting in digital marketing and customer experience, businesses can weather the storm of 3rd party price hikes and position themselves for long-term success. For guidance on strategy and recommendations to best utilize advertising dollars reach out to us at gurus@amg.team!



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