With several positive signs for the automotive industry in 2024-to-date –including uptrends in sales rates, consumer spend, production and incentive spending, all while transaction prices are falling – radio advertising should be a priority for dealers, according to J.D. Power VP Data Analytics Tyson Jominy.
“Basically, the automotive industry is growing – in fact, we're almost back to where we were pre-pandemic,” Jominy said during an RAB webinar. “Sales are very strong right now and improving every month. Far from the good old days, but still a very robust environment.”
For retailers, though, things may not be so good, and that's where radio comes back into the picture. “Even though they're coming off record highs, their profit level in Q1 alone is down maybe a third,” Jominy says, “Dealers are going to start to feel poor, and the reality is that they're not, they're still above where they were four years [ago]. Now we're looking at an environment where the inventory is higher and incentive spend is up, [and] this is [why] automakers have to spend [on advertising] to get consumers to come back to dealerships.”
Essentially, Jominy says, the message comes down to, “Come to my dealership, I can find you the car, we have inventory, and now I have great deals.”
So why radio vs. other media, especially digital media? “The role of radio remains vital,” Jominy says. “You have a line directly to the consumer about what is available today, it really gets to the heart of the matter, so it's still a very good environment for dealers – they are making good money, and they will be making even more by advertising on radio.”
How to address dealers that have shifted spending to websites such as Kelley Blue Book? “KBB is lower-funnel, to get someone directly to that dealer,” Jominy says, “while radio is upper-funnel, getting the message to a lot of consumers. By being on radio, you can take someone not in the market and get them straight to your dealership. Radio would do far better to get those consumers motivated to buy.”
In the current economic environment, promoting and advertising deals are crucial to get potential buyers in the door. “Consumers are going to need cash from automakers to get out of their loans,” Jominy says. “[With] inventory building and values declining, consumers need help. Automakers are going to start giving them more incentives, dealers will need to advertise that, and they're going to have to do it on the radio.”
Jominy's advice to sales execs when pitching dealerships' return to radio? “Incentives are the advertising here. If you're not advertising [on radio], someone else is going to win and you're going to lose. This is not the time to pull back.”