The Engine Behind the Automotive Industry

October 1, 2008

from Response Magazine

Driving customers from the Internet to the dealership, direct response marketing is steering the industry through tough times.

There is no denying that the automotive industry has been hit hard by the economic downturn. Dealers are forced to cut back on advertising due to weak sales and manufacturers are forced to offer incentives, such as General Motors' (GM) recent offer featuring the GM employee discount for all customers. But even incentives are falling short of success, says Koeppel, perhaps because of the difficulty people are having in getting credit and financing.

Emphasis has moved away from new vehicles and leasing plans, except with some of the more upscale manufacturers like Mercedes, BMW and Infiniti. Instead, marketing campaigns are focused around fuel-efficiency or free-gas incentives. Also, many dealers are increasing the advertisement of their repair services and used car inventory.

"The industry is trying to highlight the fuel-efficient segment of their product lines. However, the reality is that many of the manufacturers did not anticipate the rapid increase in gas prices and are stuck with a large inventory of gas-guzzling SUVs, trucks and other large vehicles," adds Koeppel.

As a result, he predicts the prices for new smaller cars will begin to rise in the next year to make up for the money lost on larger model sales. "The average profit on an SUV is about $10,000, while the profit on a Ford Focus today is only about $100," he says.

DR has become an effective tool for cost-effective automotive marketing. "CMOs are under pressure to show an ROI from their marketing programs. They have seen how everything can be measured online and now they are looking for that same type of measurement from their offline media and DR can provide those metrics," says Koeppel.

Chuck Tilton is the senior product marketing manager at The Cobalt Group, a company that provides Web site services, search engine optimization (SEO), lead management and E-mail marketing, and back-end data management to car dealerships. Tilton says his automotive clients are also focusing more marketing campaigns on the finance or parts and services departments at dealerships, since that is what consumers are hunting for on search engines these days.

"Sometimes better than a new vehicle is an E-mail campaign once a consumer has purchased; the program maintains a relationship through E-mails. Dealers can't get them to buy another vehicle, but they love the maintenance business," says Tilton.

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