It’s hard to imagine searching for a car dealership without going online first, and that might be why automotive businesses see online reviews as an essential business tool.
Dealer reviews published on Cars.com amounted to over 1 million in May of 2015. Cars.com started dealer reviews four years ago in 2011 and since then, online dealership reviews are an essential part of the automotive shopping experience. Seven out of ten consumers said dealer reviews are very or extremely important for online research, according to Cars.com.
“A few years ago, online reviews were limited to restaurants and entertainment, but now they’re essential to nearly all consumer transactions,” said Barbara Mousigian, vice president of product at Cars.com. “We’ve seen a transformation within the automotive category, as both retailers and manufacturers have embraced the power of online reviews as a means to build their brands with potential customers.”
A Cars.com study released last year found that dealerships that responded to reviews had higher ratings, which suggests that dealerships should start taking online reviews more seriously (if they aren’t already).
Brian Sparker, Head of Content at ReviewTrackers, said dealerships and automotive businesses should focus their efforts on online reputation management.
“You could potentially save hundreds of thousands of dollars in your advertising budget by managing your reputation online,” Sparker said. “Companies are using advertising dollars to direct consumers to their site, but if someone Google’s the company and sees a negative star rating, they will lose a potential customer.”
Sales to slow down after 2016
With the help of low gas prices, car sales reached 17.47 million in 2015, an increase of 5.7 percent from 2014, according to Automotive News. The trend will continue in 2016 but will slow down in later years, according to the National Automobile Dealers Association (NADA).
“We are living peak auto sales right now, and we will see one more year of that growth in 2016,” said Steven Szakaly, chief economist at NADA, “but only because of rising incentives that will keep consumers coming into showrooms. The real worry now is whether we’re starting to pull sales ahead from future years.”
Car sales will set a record in 2016. According to Szakaly, it’s expected that automakers will increase incentives this year due to the increase in the output of cars and to create balance in a slowing global economy.
“If we were looking at a market with stable global growth and no increases in manufacturing, auto sales might actually fall in 2016,” he said. “But we have a situation where plants have been built, demand is slowing, and the U.S. market remains the most profitable in the world. Growth in places like Mexico will offer some temporary reprieve, but it won’t be sufficient to offset falling demand from Brazil, South Africa and other emerging markets. This means incentives will rise to stoke demand.”
More than 2.2 million jobs were created by dealerships in 2014, and U.S. new-car dealerships employed more than 1.05 million people in 2014. That’s 64 people at each dealership earning an average of $55,000 or more per year, according to a report by NADA.
“Automotive dealerships and businesses could potentially lose a large part of the market share, in what is expected to be another record-breaking year for car sales, if they are not on top of their reputation management,” Sparker said. “One way to manage your online reputation is by using customer feedback effectively and managing online reviews.”