How the Chip Crisis Affects Car Dealerships’ Reputations

Ali Fawaz

The global computer chip shortage has resulted in inventory shortages on car lots, higher prices, declining sales, and a more challenging experience for shoppers. And the shortage might persist well into 2022. So, how has the global chip shortage affected consumers’ opinions of automotive dealerships

We decided to find out. For our 2021 Automotive Reputation Report, we analyzed thousands of dealership reviews in North America and beyond to discern the main drivers of buyer sentiment. We found that car dealers need to do a better job managing customers’ expectations with the supply chain-fueled inventory shortage.

Customer Sentiment in the Auto Industry

First off, here’s the good news — a great dealership experience matters very much to consumers. Amid the rise of digital retailing, consumers will go out of their way to visit a brick-and-mortar dealership that they like. 

64% of consumers we surveyed said that they would travel more than 20 miles away to visit a top-rated dealership for shopping and test drives.  It’s essential that your dealerships deliver a great shopping experience for customers to compare all your cars.  In that regard, the chip shortage is a problem.

It should be no surprise that consumers are talking about the fall-out of the chip shortage. Reviews mentioning shortages increased 32.6x from January to July 2021. Unfortunately, sentiment about shortages is dragging down the auto industry’s reputation. In fact, reviews mentioning shortages are roughly twice as likely to be negative compared to reviews about the industry generally. 

Auto Report 2021 reviews

Related: When ‘Sludge’ Could Be Helpful For Auto Dealerships

We used natural language processing (NLP) to uncover common themes in consumer reviews that cite shortages. The reviews suggest that their dissatisfaction doesn’t stem from a lack of inventory but rather a perception that dealerships are jacking up prices:

Another shopper detailed their experience:  “When I arrived at the lot the [Name of Vehicle] was there. It had the features I like and the MSRP showed the price to be $27k. When I asked the sales rep about the second sticker price of $35K, I was told that it was due to the shortage of inventory. An $8,000 markup, talk about highway robbery.” 

The customer’s level of dissatisfaction escalated after the shopper asked to speak to someone senior in the dealership. Then, they felt talked down to when the customer pressed the issue.

It’s not that customers are necessarily upset about a chip shortage, but how dealerships communicate with them about the ramifications of the shortage. That includes the impact on the vehicle’s price and the elimination of rebates or incentives. The bottom line is that dealerships face a reputation problem.

Related: Automotive Dealerships: Your Customers Dig Your Digital Experience

What Dealerships Should Do

Car dealership employees may feel like there is not much they can do about high prices.  But our analysis indicates that dealers should be more proactive about managing customers’ expectations:

The Reputation 2021 Automotive Reputation Report digs deeper into all the factors influencing the reputation of the automotive industry, along with ranking the top dealerships and OEMs.

Keep Reading: The Evolution of the Automotive Customer Journey

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