Automotive: The lack of semiconductors leads to a reduction in the amount spent on advertising

The long delay in the delivery of cars, due to the lack of semiconductors, leads the car manufacturers to the decision to reduce the amounts they will spend on advertising next Christmas. The fewer cars the fewer the reasons that can lead potential customers to the showrooms. Now, the advertising of new models comes second.

It is a fact that many dealerships in Greece today have in their shop windows cars that have already been sold and do not deliver them to their owners, because they just wait for their replacement first. The problem is very big and the dealers do not deliver the few cars at their disposal, because if they do, their exhibitions will remain empty.

According to a survey conducted by Reuters in the previous days, it was found that digital advertising fell by about 10% last summer and autumn, while there was a decrease of 5% in television advertising. Now that we are going through a very interesting period for the automotive industry, the dilemma arises as to whether car manufacturers and dealers should advertise their new models. Given the challenges of the global supply chain and the “arrhythmias” of many production plants that have suspended several shifts, advertising is changing its target and the reduction of advertising amounts is on the table.

Analytics Pathmatics found that automakers cut their digital advertising spending by about 10 percent from late July to late October, compared to the same period before the pandemic. Another analytics company, EDO, found that TV advertising spending also fell by 5% compared to the same period last year.

But despite the fact that there are no cars available, according to the Pure Cars survey, dealers who reduced their advertising spending between March and August this year had a larger overall drop in sales than dealers who continued to advertise. It was found that dealers who reduced the amount they spent on advertising between 50% -89% had an average drop in sales volume of 28%, while other marketers who increased their advertising spending had a very small drop.

What is certain is that the market is facing significant problems. Deliveries of most models exceed 6 months and in case additional equipment is requested and they need to be included in a special list, the wait reaches even 8 months. Most Greek sellers report that orders placed these days will be satisfied next Easter. The space is long and discourages potential buyers. On the other hand, the next wave of the pandemic creates a climate of insecurity and effectively postpones any decisions of consumers to buy a new car.

SOURCE: AMPE