Election Day in the United States is November 5th, 2024. As the outcome will have a major effect on the country, it could also lead to an impact on the automotive industry. We’re going to break down how the automotive industry’s future depends on the presidential election and how you can prepare your dealership.
How Can The Presidential Election Affect the Auto Industry?
The outcome of the presidential election can affect 3 major factors in the auto industry:
- Inflation level
- Economy
- Interest rates
Inflation Level
Inflation is the increase of prices for goods and services. For example, McDonald’s sales have declined because prices have inflated. Car buyers and sellers are preparing for a similar situation in the auto industry.
According to a survey by Cox Automotive, inflation is the biggest concern among buyers and dealers. 74% of buyers and 81% of dealers believe the outcome of the election will influence inflation (which is greater than the amount of people who expected Big Mac prices to rise 20%.)
Economy
The economy is always unpredictable. From unemployment rates to an unexpected pandemic, anything can affect the economy, no matter the time of the year. Cox Automotive noted “nearly 75% of automobile shoppers” expect the outcome of the U.S. presidential election to affect the economy. Because of this, car shoppers may hold off on buying a vehicle until the direction of the economy is more clear.
Interest Rates
While we’re on the topic of U.S. presidents, Abraham Lincoln once said, “Good things come to those who wait.” (We’re not sure if he was talking about car interest rates, but it still applies to this situation.) For car buyers, waiting for interest rates to drop may reduce the amount of interest you pay on a loan, leading to lower monthly payments and total cost.
In a statement from Vanessa Ton, senior manager at Cox Automotive, "If shoppers believe interest rates will be lower in the future, or that the economy will be improving, or worsening, post-election, they are more likely to stay on the sidelines, waiting for the dust to settle.”
Charlie Chesbrough, senior economist for Cox Automotive, also said "There is a view from consumers now that if they wait, they're going to get a better price.”
What Are Car Dealers Saying?
While a good percentage of buyers expect the outcome of the election to affect the auto industry, dealers are on the pessimistic side. The survey by Cox Automotive found that 38% of dealers expect vehicle sales to worsen, while 31% expect sales to either improve or remain the same. 82% of dealers also believe the outcome of the election will affect interest rates.
How Can I Prepare My Dealership?
In the words of Lil Wayne, you should be “prepared for the worst, but still praying for the best.” Here are 3 ways you can prepare your dealership for the approach and results of the upcoming presidential election:
- Monitor developments
- Diversify your inventory
- Adjust your budget
Monitor Development
The closer we get to election day, you can keep up with the news and potential policy changes that could affect the automotive industry. Consider how different election outcomes could impact regulations, tax policies, and trade policies.
Diversify Your Inventory
Just like any other time of the year, maintaining a good variety of inventory can help you adapt to potential changes in consumer demand. This can help meet different buyer demands, regardless of economic conditions.
Adjust Your Budget
You can review and adjust your budget and prepare for increased and decreased sales scenarios. Identify areas where you can reduce costs without affecting normal operations.
Do I Understand How the Presidential Election Will Affect the Automotive Industry?
The automotive industry is constantly changing. With the presidential election coming up, this leaves room for a lot of uncertainty.
It will be interesting to see how the outcome of the presidential election will affect the auto industry, as it will take place in November, which is during the lead up to one of the seasons that see increased car sales. However, understanding the impact the election will have and how to prepare can help you keep business steady.
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