People, process and technology are crucial to the automotive industry

Riding on a wave of unprecedented growth which saw the Canadian car business sell more vehicles in the last few years than at any point in its history, the turn to grim warnings fuelled chiefly by NAFTA uncertainty has been arresting, to say the least.

While the spectre of this protectionism represents an undeniable emergent threat, it’s worth noting that even without the direct impact of any real or imagined auto tariffs, the Canadian auto market has been posting monthly yearover-year sales decreases for the better part of the year.

To be clear, the market remains strong and still on pace to post one of the better years in recent memory. That said, the simple fact remains that we’re seeing the first sustained downturn in some time. Put another way, if the textbook definition of a recession is two consecutive quarters of negative growth, then we certainly find ourselves in the midst of a technical car-cession.

So, what are brands and their dealers to do when faced with a new (or forgotten) reality in which growth isn’t, in part, a function of a rising tide?

Recent cross-industry J.D. Power research shows that the answer boils down to people, process and technology.

J.D. Power’s Canadian Sales and Service Satisfaction data as well as our promoter data show that clearly articulating and building an exceptional, consistently executed customer-centric retail experience is the most reliable roadmap to generating brand loyalty. For example, owners who report that their recent dealer service occasion exceeded their expectations are almost twice as likely to say they will “definitely” remain loyal, compared with owners who say those expectations were merely met — and almost 20 times more likely than those whose experience fell below expectations.

In short, having the right customer-focused and proces-strained team utilizing the latest technology to most efficiently and transparently communicate with customers is critical.

Next, to address the increasing challenge of attracting conquest owners in a highly competitive marketplace, brands will have to expand their efforts to meet the expectations of shoppers in digital and e-commerce environments.

Our research already shows more consumers today are deciding which vehicle to purchase online than ever before, a trend to which an ebb seems unlikely. What’s more, they will increasingly have to develop strategies for those customers who, after growing accustomed to the subscription economies of Netflix, Apple Music, and the Amazon ecosystem, begin looking to auto manufacturers to provide them with viable Transportation-as-aService solutions.

At the end of the day, and as we’ve discussed in this space over the last few years, some of the industry’s underlying fundamentals have been concerning for some time. Our national consumer debt-toincome ratio is a constant source of consternation. Arguably the automotive brands themselves collectively spend an unsustainable amount of money on purchase incentives in this country. And, despite consecutive years of record-high vehicle sales and nearly a decade of sustained economic growth, the percentage of Canadians carrying 72-, 84- and 96-month term vehicle loans remains at levels that would have been inconceivable to lenders less than a decade ago.

These factors, combined with the aforementioned trade-dispute have the industry on edge. If a downturn is in fact on the horizon, brands and their retailers will lean heavily on the equity they’ve built in their customer experience strategies. However, those brands that continue to invest in the people, processes and technologies of their retail experience can expect to be among the earliest benefactors and growth leaders not just when broader-based gains return, but in the interim battle for customer loyalty and conquest sales.