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The chips are down: Keeping customers engaged through the chip shortage

Are you currently suffering from a huge backlog of customers waiting to collect the new cars they’ve ordered? Don’t worry: you’re not the only one.

All over the world, carmakers and other technology companies are suffering from a shortage of semiconductor chips. These chips are essential parts of the computer systems that are at the heart of all modern cars, and so new car production has been seriously affected.

The problem is so bad that some customers wanting to place an order for a new car are being told that they will have to wait until next year to pick it up. Faced with such a long delay, many customers are choosing a more readily available used car instead. It’s no surprise, therefore, that new car registrations in June 2021 were more than 16% down on average for a normal June.

When asked what you felt was currently the biggest challenge of the chip shortage for your business, 49% highlighted the longer ordering times you were experiencing, while for 23% the lack of new cars to meet demand was proving most challenging.

So what can you do to keep customers interested and happy, and still pick up new car sales even in these difficult circumstances? This blog takes a look at the situation, and what you can do to respond.

What has caused the shortage?

The shortage of chips available to car manufacturers is down to a variety of contributing factors, the most obvious one being related to COVID-19. While the pandemic shut down many manufacturing plants, demand for chips for devices like games consoles soared as people around the world were forced to entertain themselves from home.

Another reason related to the pandemic was the pause in production by many carmakers. This meant they had no need for more chips until they restarted, and so the manufacturers stopped making them. When carmakers kicked off production again, they found that not only do factories take up to six months to restart chip production, but that chips for cars were of little interest to chip makers cashing in on the consumer tech boom.

The final factor could simply be put down to bad luck. A storm in Texas in February caused widespread power cuts in a hotbed area of chip production, while a fire in a major production plant in Japan in March took even more capacity offline. All this has meant global car production this year will be millions of vehicles less than originally planned.

How you can respond

There’s not much you can do about the chip shortage, but there are plenty of things you can do to keep leads warm and stop them from walking away while they wait for their order to arrive.

  1. Regular video updates: The one thing customers will be looking for is information. Within the industry we all know what has caused these delays however your customers may not be as well informed and not understand the situation. They’ll want to know what the current situation is and what their likely delivery date is at regular intervals. Regular video updates can help you relay this information and explain the reasons behind the delays, helping the customer understand that it’s for reasons beyond your control.
  2. Better informed customers: Video can also help explain some of the more practical ramifications of the chip shortage to customers. For example, some car manufacturers are readjusting the specs of their cars to accommodate a smaller number of chips, including downgrading in-car entertainment systems. This is causing a number of customer service issues, with some customers unaware of the changes until their car arrives – so videos that proactively inform them of the switch can tackle complaints before they arise.
  3. Generating excitement: There’s also plenty of scope to be more creative with your comms through the delay. A series of walkaround videos that go into more detail on individual features can help the customer stay interested, as well as give them confidence that they’ve made the right choice and that the car they’ve ordered will be worth the wait. Developing dedicated post rolls and video purposes within CitNOW can help you in this process, too.
Creating a back-up plan

Of course, some customers will naturally be more patient than others – and there will be a certain proportion that just aren’t willing or able to wait that long to get their new drive. In order to keep them as a customer, you’ll therefore need to offer them something suitable from your used car stock.

But even this will be easier said than done. With so many disappointed new car customers turning to the used market, the values of pre-owned cars are going through the roof. Autocar has found that prices have risen by around 10% in the last 12 months, and by nearly 20% for popular SUV models. Many dealers are finding it hard to get used stock for a fair price as a result, with a knock-on effect on part exchange values.

One solution to this is to simplify the part exchange process with a platform like Tootle. This manages the whole process – from hosting photos and videos of the cars your customers upload for valuation, to linking with cap hpi data to ensure that customers can’t overvalue their trade-ins and that a fair price is agreed. This can help you get faster access to used cars without paying over the odds, so that you can meet customer demand in a way that still yields a decent profit.

As a CitNOW user you have access to a range of resources to help you get the most from your experience, and our friendly team is always happy to help. You can also learn more about how Tootle, part of the CitNOW Group, can transform your part exchange process here.